Switzerland and China have signed a new double taxation agreement (DTA) in the area of taxes on income and assets in Beijing.

The DTA replaces the 1991 agreement and contains provisions on the exchange of information in accordance with the currently applicable international standard.

Apart from an OECD administrative assistance clause, Switzerland and China have agreed to reduce the maximum rate of withholding tax on dividends from 10% to 5% if the company receives the dividends holds a stake of at least 25% in the distributing company.

The withholding tax rate for royalties has been lowered from 10% to 9%. Also, China has agreed not to levy any business tax or any value added tax on international transport services provided by Swiss shipping companies and airlines.

The new DTA, which is subject to an optional referendum in Switzerland, has to be approved by parliament in both countries before it comes into force.