Market Taxation Guide - China

17.10.2016

This Market Taxation Guide (China) provides the following details:

  • Reference information about all taxes applied at source, through Clearstream Banking and its local depositories, to securities deposited in Clearstream Banking; and
  • Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.

New and improved tax information and procedures that become available will be included on an ongoing basis.

Important note:

This Market Taxation Guide (including any attachments and other links) is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Market Taxation Guide, whether customers or otherwise, should not act or refrain from acting on the basis of any information included in this Market Taxation Guide without seeking appropriate legal or other professional advice.

Types of securities eligible in Clearstream Banking

  • Chinese debt securities traded in the China Interbank Bond Market (CIBM) are eligible to be held in Clearstream Banking; and
  • Chinese equities eligible in Clearstream Banking and traded in mainland China are B shares, which are shares of:
    • Companies listed on the Shanghai Stock Exchange and deposited at the Shanghai branch of the China Securities Depository and Clearing Corporation (CSDCC); or
    • Companies listed on the Shenzhen Stock Exchange and deposited at the Shenzhen branch of the CSDCC. 

Note:

  • Chinese H shares are also eligible in Clearstream Banking. These shares are issued by companies based in mainland China and regulated by Chinese law but denominated in Hong Kong dollars and traded on the Hong Kong Stock Exchange.
    Details of the taxation applied to H shares are available in the Market Taxation Guide - Hong Kong.
  • Chinese A shares are also eligible in Clearstream Banking. These shares are Renminbi-denominated, issued by companies based in mainland China and are traded on Chinese stock exchanges.
    Details of the taxation applied to A shares are available in the Market Taxation Guide - Hong Kong.

Withholding tax

Holding restriction

Withholding
tax rate

Relief
at source

Quick
refund

Standard
refund

Equities

Yes a

10%

Clearstream Banking does not provide tax Relief at source, Quick or Standard refund services for the China market.

N/A

N/A

N/A

CIBM bonds

Yes

10% b

Clearstream Banking does not provide tax Relief at source, Quick or Standard refund services for the China market.

N/A

N/A

N/A

a. Customers may only hold proprietary assets accounts on China market. Please refer to the Settlement services section of the Creation Link Guide - China. Customers are responsible for ensuring compliance with this restriction.
b. According to the Corporate Income Tax Law and its supplementary Detailed Implementation Rules, income sourced from the People’s Republic of China by offshore institutional investors is subject to 10% income tax. Currently, only coupon interest of government bonds (issued by the Ministry of Finance and local governments) are tax exempt. For other types of bonds including corporate and enterprise bonds, offshore investors are subject to the 10% income tax.

There is no standard WHT practice in the China Interbank Bond Market, income payment is paid in gross amount to foreign investors.

Clearstream Banking does not provide tax Relief at source, Quick or Standard refund services for the China market. Customers are advised to engage a local tax agent for all tax related matters according to market practice.

Capital gains tax

There is no capital gains tax withheld through Clearstream Banking on securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.

Stamp Duty

There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.