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22.05.2024
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The convention against tax evasion has entered into force in China

scale 1200 copy copyThis document is part of the international tax reform of the Group of Twenty.

The Multilateral Convention on the Implementation of Measures Related to Tax Agreements in order to counteract the Erosion of the Tax base and the Withdrawal of Profits from Taxation has entered into force in China. This is stated in a message published on Friday by the trade mission of the Russian Federation in China.
"On September 1, 2022, the Multilateral Convention (MLI) on the implementation of measures related to tax agreements in order to counteract the "erosion of the tax base and the withdrawal of profits from taxation" (BEPS) entered into force in the People's Republic of China," the statement on the website of the trade mission said. It is noted that "this convention is part of the international tax reform of the Group of Twenty. It is clarified that the action plan to combat BEPS was adopted by the G20 countries back in 2013, when Russia chaired the G20.
According to the trade mission, in a broad sense, BEPS means a set of tax planning schemes used by multinational companies to artificially withdraw taxable profits from taxation in those countries where this profit was received. It is noted that the result of using BEPS is a very low tax burden on the income of multinational corporations as a whole, as well as the so-called "double non-taxation", that is, a situation where a company does not pay taxes either in the jurisdiction where the income was received or where they were declared for tax purposes.
The Trade Mission also notes that the practice of using BEPS leads to fundamental distortions in the principles of fair competition - large companies using BEPS in order to minimize their tax obligations arising in different countries receive commercial advantages in comparison with enterprises operating mainly at the national level.
"It is expected that for China, the entry into force of the convention will mean strengthening measures against tax evasion provided for in bilateral agreements on the avoidance of double taxation concluded between China and other countries," the trade mission said in a statement. It is also noted that, according to the General Tax Administration of the People's Republic of China, 47 taxation agreements concluded by China already fall under the convention. In the future, as new states join the convention, the number of bilateral taxation agreements with the participation of China falling under its scope may grow to 100, the document says.
The Trade Mission notes that Russia ratified the multilateral convention in May 2019, with entry into force on October 1, 2019. Thus, the Agreement between the Government of the Russian Federation and the Government of the People's Republic of China on the Avoidance of Double Taxation and on the Prevention of Tax Evasion with respect to Income Taxes, concluded on October 13, 2014, also falls under the convention, the statement says, writes TASS.