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5.5. Source Rules with Respect to Income Derived by Non-Residents

The source rules for income derived by resident and non-resident enterprises are the same in China. The sources for different types of income are defined under Chinese law as:

  • Sale of goods – the source is where the transaction takes place
  • Provisions of services – the sources is where the services are provided
  • Transfer of property –
    • For immovable property, the source is where the property is located.
    • For movable property, the source is where the enterprise or place of business that transfers the property is located
    • For equity investments, the source is where the invested enterprise is located
  • Dividends, profit distributions and other returns on investment – the source is where the enterprise making the distributions is located
  • Interest, Rental, and Royalty – the source is where the enterprise or place of business that bears or pays the income is located; or the place of residence if an individual bears or pays the income
  • Other income – the source of income is determined by the departments of the China State Council in charge of finance and taxation