China signals action against cross-border tax avoidance

On 2 December 2014, China’s State Administration of Taxation (SAT) issued administrative guidance on general anti-avoidance rules (Guidance). The Guidance will apply to the tax avoidance arrangements carried out on or after 1 February 2015 and to cases that are not settled by 31 January 2015.

It describes how the tax authorities will apply the 'special tax adjustment' powers available to them under the country’s general anti-avoidance rule, set out in Article 120 of the Corporate Income Tax

The Guidance specifies that the main characteristics of tax avoidance arrangements are:

Under the Guidance, special tax adjustments would be made pursuant to the substance over form principle by comparing a transaction with similar arrangements that contain reasonable commercial purposes and economic substance. Special tax adjustments may be made through:

The new Guidance does not cover:


Date: 9 January 2015
Source: STEP