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TIEA between China and British Virgin Islands

China

As a famous offshore financial centre, BVI has provided tax preferential policies and flexibilities for those companies registered there. An unofficial statistic is that for the year 2010, BVI's investment into China amounted to around 13% of the total foreign investment for the year. The TIEA between China and BVI was issued on 22 June 2011. Taxand China reviews the introduction of tax information exchange agreement between China and BVI and how this will benefit companies that hold a Chinese entity through BVI.

Generally, the purpose of setting up TIEA is to enhance the transparency of the tax information between the countries and strengthen more strict tax compliance trace/administration systems. Currently, China has set up TIEA with six offshore financial centre countries, including Bahamas, Isle of Man, Guernsey, Jersey Island, Bermuda and BVI. For the TIEA between China and BVI, it is applicable to income derived on or after 1 January 2011. The exchange tax information will cover the following items only:

  • In China - individual income tax and enterprise income tax
  • In BVI - income tax, salary tax and property tax

Taxand's Take


The actual implementation of this TIEA may still be limited at least at this stage due to the lack of administration sources of the authorities. In the meantime, we still suggest those international companies who hold their China entity via BVI holding structure should consider the relevant China taxation exposure by internal review and further follow up

Your Taxand contacts for further queries are:
Kevin Wang
T. +86 21 6447 7878 - 526 / 517
E. Kevin.Wang@hendersen.com

Frank Tao
E. Frank.Tao@hendersen.com

Taxand's Take Author