China’s State Administration of Taxation (SAT) has established rules for implementing its General Anti-Avoidance Rule (GAAR), effective 1 February 2015. A PwC summary and details of the rule, as translated into English, are attached for reference:
Note, as in most GAAR provisions, the definition is subjective in nature. Additionally, these rules would be applied after the Specific Anti-Avoidance Rules (SAAR) are applied, resulting in a tiering of potential disallowance avenues. However, the MAP rules could be employed to minimize double taxation consequences.
As the GAAR provisions are being enacted into domestic law, as well as treaties, in addition to existing rules for SAAR, these rules are critical for new arrangements / transactions, as well as preparing relevant documentation for future reference and defense.