Does the Chinese taxation system provide relief for foreign tax payments?
The Chinese taxation system provides for avoidance of double taxation and prevention of evasion for taxes incurred in territories outside China under tax treaties. Tax treaties or arrangements exist with 77 countries and regions including Japan, the USA, the UK, Belgium, France, Singapore, Malaysia, Norway, Denmark, Finland, Sweden, Canada, Thailand, Germany, New Zealand, Italy, Poland, Yugoslavia, Romania, Pakistan, Switzerland, Kuwait, the Netherlands, Korea, Vietnam, Mauritius, Hong Kong, etc.
FIEs are allowed to deduct from the amount of tax payable the foreign income tax already paid abroad in respect of the income derived from sources outside China; however, the deductible amount cannot exceed the amount of income tax otherwise payable in China in respect of the income derived from sources outside China.
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