Income derived in tax years commencing on or after 1 January 2027 by residents of China and Norway shall be governed by the revised Agreement between the Government of the People’s Republic of China and the Government of the Kingdom of Norway for the Elimination of Double Taxation with Respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance. This Agreement entered into force on 16 June 2026. Against this backdrop, Kaizen has carefully summarized the key provisions of the revised tax treaty to offer you clear, practical reference.
-
New Anti-Abuse Provision to Prevent Contract Splitting
Under the latest provisions, a building site, or a construction, assembly or installation project, constitutes a permanent establishment if it lasts for more than 12 months, and the other State has the right to tax.
In addition, if your enterprise carries out activities at a building site, or a construction, assembly or installation project in a Contracting State, and these activities cumulatively exceed 30 days but do not exceed 12 months within one or more periods of time, and one or more closely related enterprises of your enterprise carry out related activities at the same building site, or construction, assembly or installation project during different periods of time, with each period exceeding 30 days, then these different periods of time shall all be counted towards the time during which that enterprise carries out activities at that building site, or construction, assembly or installation project.
Kaizen Reminder:
The practice of splitting contracts by having related entities take turns to enter into separate agreements will no longer be effective from 1 January 2027. A permanent establishment will be deemed to exist where the cumulative period of activities exceeds 12 months.
-
Dividends
Dividends paid by a company which is a resident of one Contracting State to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State in accordance with the laws of that State. The tax rate is divided into the following two cases:
-
If the beneficial owner of the dividends is a resident of the other Contracting State, and in the case where the beneficial owner is a company, it is required to directly own at least 25% of the capital of the company paying the dividends throughout a 365-day period that includes the day of payment of the dividends; in such case, the tax so charged shall not exceed 5% of the gross amount of the dividends;
-
In all other cases, the tax so charged shall not exceed 10% of the gross amount of the dividends.
|
Kaizen Reminder:
To qualify for the 5% preferential tax rate, two mandatory conditions must be satisfied: a minimum shareholding of 25% and continuous holding for a full 365 days. Enterprises with complex shareholding structures are recommended to conduct an advance review to verify compliance.
-
Interest
Interest arising in one Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State in accordance with the laws of that State. However, if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amount of the interest.
Interest arising in one Contracting State and beneficially owned by a resident of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State, provided that the interest is beneficially owned by the government of the first-mentioned Contracting State (such as the People's Bank of China, China Development Bank, the Export-Import Bank of China, China Investment Corporation, the Silk Road Fund and major state-owned banks, etc., subject to the official list), or is interest on a loan guaranteed or insured by the government of the first-mentioned Contracting State.
Kaizen Reminder:
General interest is subject to a maximum withholding tax of 10%. If government-backed loans or guarantees are involved, they may qualify for exemption and are worth confirming separately. Enterprises with financing arrangements involving both China and Norway are advised to calculate the tax burden in advance.
-
Royalties
Royalties arising in one Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State in accordance with the laws of that State. However, if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10% of the gross amount of the royalties.
The term "royalties" means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films, and films or tapes for radio or television broadcasting), any patent, trademark, design or model, plan, secret formula or process, for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.
Kaizen Reminder:
For cross-border payments such as patents, trademarks, copyrights and technology licensing, the withholding tax shall not exceed 10%. Enterprises in China and Norway involved in technology introduction or licensing are advised to check the contract terms in advance to confirm the applicable tax rate.
-
"Master Gate" for All Preferences: Principal Purpose Test
To prevent abuse of the Agreement, the "Principal Purpose Test" provision has been incorporated into the "Entitlement to Benefits" article of the Agreement, namely, if obtaining the tax benefits under the Agreement is one of the principal purposes of the arrangements or transactions of a person applying for such benefits, such benefits shall not be granted, unless it can be established that granting such benefits in such circumstances would be in accordance with the object and purpose of the relevant provisions of the Agreement.
English
Home
Knowledge
KNOWLEDGE
