Dividing the Spoils of Foreign Investment: China's Shifting Tax Treaty Policy

(2017) 23(3) New Zealand Journal of Taxation Law and Policy 350-369

20 Pages Posted: 6 Dec 2017

See all articles by Li Jin

Li Jin

Jinan University, Guangzhou

Richard Krever

University of Western Australia Law School

Date Written: September 1, 2017

Abstract

China attracted considerable foreign investment following the opening of its economy in 1979. With the switch to a quasi-market economy, China became reliant on taxes to fund government, opening the door to potential double taxation of profits from foreign investment, first in China and second in the investors’ home countries. The issue was resolved in a series of tax treaties that divided taxing rights between China as a host country and the “residence” countries of the foreign investors. In many respects, China was able to extract generous concessions from the treaty partners, particularly OECD countries anxious to invest in China. Several decades later, the tables started to turn, with Chinese investment outbound climbing and eventually surpassing inward investment. Following renegotiation, a number of the original treaties were replaced or revised. This article studies the extent to which China achieved a new division of taxing rights in its treaty network.

Suggested Citation

Jin, Li and Krever, Richard, Dividing the Spoils of Foreign Investment: China's Shifting Tax Treaty Policy (September 1, 2017). (2017) 23(3) New Zealand Journal of Taxation Law and Policy 350-369, Available at SSRN: https://ssrn.com/abstract=3069931

Li Jin

Jinan University, Guangzhou ( email )

Huang Pu Da Dao Xi 601, Tian He District
Guangzhou, Guangdong 510632
China

Richard Krever (Contact Author)

University of Western Australia Law School ( email )

M253
35 Stirling Highway
Crawley, Western Australia 6009
Australia

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