State taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning, Yangzhou Institute of Taxation:? 1. The beneficial owner refers to the person who has the ownership and control over the income or the rights or property based on the income. Beneficiary owners generally engage in substantive business activities, which can be individuals, companies or any other groups. Agents, catheter companies, etc. do not belong to the beneficial owner. ? A conduit company refers to a company usually established for the purpose of evading or reducing taxes, transferring or accumulated profit. Such companies are only registered in the host country to meet the organizational form required by law, and do not engage in substantive business activities such as manufacturing, distribution and management. ? Second, when determining the identity of the beneficial owner, we should not only understand it from the perspective of technology or domestic law, but also proceed from the purpose of tax treaties (that is, avoiding double taxation and preventing tax evasion), and analyze and determine it according to the principle that substance is more important than form, combined with the actual situation of specific cases. Generally speaking, the following factors are not conducive to the identification of the applicant's beneficial owner:? (1) The applicant is obliged to pay or distribute all or most of the income (such as more than 60%) to the residents of the third country (region) within a specified time (such as 12 months after receiving the income). ? (2) The applicant has no or almost no other business activities except holding the property or rights derived from the income. ? (3) In the case that the applicant is an entity such as a company, the assets, scale and staffing of the applicant are small (or less) and it is difficult to match the amount obtained. ? (4) The applicant has no or almost no right to control or dispose of the income or the property or rights derived from the income, and does not bear or rarely bears risks. ? (five) the other contracting country (region) does not tax or exempt the relevant income, or taxes, but the actual tax rate is extremely low. ? (6) In addition to the loan contract under which interest is generated and paid, there are other loan or deposit contracts similar in amount, interest rate and signing time between the creditor and the third party. ? (7) In addition to the contract for the transfer of the right to use copyright, patent and technology on which royalties are generated and paid, there is a contract for the transfer of the right to use or ownership of copyright, patent and technology between the applicant and a third party. ? According to the income of different nature, through the comprehensive analysis of the above factors, it is considered that the applicant does not meet the provisions of Article 1 of this notice, and the applicant should not be recognized as the beneficial owner. ? 3. When applying for tax treaty treatment, taxpayers shall provide information related to the factors listed in Article 3 of this Notice that can prove that they are beneficial owners. When examining and approving the application of non-residents to enjoy the relevant provisions of the tax agreement, all localities should deal with the identification of beneficial owners in accordance with the above provisions, and if necessary, confirm relevant information through the information exchange mechanism. All localities should sum up experience and find problems in time in the specific implementation, and report difficult cases to the State Administration of Taxation (International Taxation Department) for solution. State Taxation Administration of The People's Republic of China, October 27th, 2009