Trump Administration Preparing to Terminate Decades-old Tax Treaty with China

Key Takeaways

• Terminating the treaty could expose American companies to arbitrary tax audits and investigations, higher tax burdens, and greater costs and complexities when repatriating profits.
• Treasury is expected to deliver its recommendation to the president within the coming days.
• The treaty prevents double taxation of corporate and individual income, caps the withholding tax rate at 10%, and provides a mechanism for cooperation between US and Chinese tax authorities.