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Tax Structure and Planning
With China's significant economic growth, many multi-national companies now hold investments there and in other parts of Asia. This cannot be done without thorough knowledge of the terms and conditions contained in various double tax treaties and of the domestic tax legislation in a particular jurisdiction.
Baker Tilly Hong Kong offers clients expert advice on optimal investment structures in Asia with regard to relevant tax legislation of the domiciling jurisdiction of the ultimate holding company (which may be a U.S. corporation or a company incorporated in the E.U.)
We also have the expertise to advise companies on the most tax-efficient group structure, the best domicile and on the establishment of trusts to minimise their overall tax exposure.
For example, Mauritius is often employed as a jurisdiction for setting up entities for holding investments in China as a double taxation treaty exists. Tax Sparing Relief is included in many of the double tax treaties Mauritius has signed with other countries, including China, and this can be used as a powerful tool in structuring investments in Asia.
Recently Hong Kong has signed a revised Double Tax Arrangement with mainland China which becomes effective on 1st April 2007 for Hong Kong. This revised Double Tax Arrangement offers the lowest PRC withholding tax on dividends paid by an enterprise inside China to an overseas recipient. Therefore, Hong Kong has become an ideal platform for holding China investments.
The U.S.-China double tax treaty does not, however, contain any tax sparing relief and U.S. investors can only rely on the relevant provisions within the U.S. tax legislation to seek relief from having profits derived by subsidiaries in China taxed initially in China and taxed again in the U.S., for example when dividends are repatriated to the U.S. parent company.
For further enquiries, please contact:
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