Tax Treaties in China’s Legal Order: Effectiveness and Recent Developments

Abstract

China has so far developed a treaty network consisting of 100 tax treaties, two tax arrangements and one tax agreement. For a comprehensive understanding of China’s tax treaties, this paper first examines the Chinese approach to the relationship between international law and domestic law in order to describe the effectiveness of tax treaties in China’s legal order. Influenced by multiple factors, China follows common international practice, but in a flexible way. In addition, the absolute supremacy of tax treaties over domestic tax laws is debatable. By taking the China-France treaty and China-Uganda treaty as examples, this paper analyses the impact of the OECD and UN Models on China’s tax treaties in order to identify major trends in China’s tax treaty policy. Although China tends to adopt the perspective of capital exporting countries in revising and signing tax treaties, China’s tax treaty is still a mixture of the OECD and UN Models, given that the fast-developing economy is not the only determining factor. In conclusion, considering the ongoing reform of tax measures, the author argues that further significant changes in the effectiveness and development of China’s tax treaties are to be expected.