China issued regulations Friday that will allow some companiesbased outside of the country to pay just 5% withholding tax ondividends repatriated from China, down from the 10% rate companiesfrom countries without a tax treaty would pay. The change wouldapply to Hong Kong and Singapore, but will not apply to the UnitedStates, as the existing double-taxation treaty sets the withholdingrate at 10%.

Companies have had difficulty qualifying for the lower tax ratesince it was put in place in 2008 because the law required theoverseas parent company show substantial business in the othercountry. Now the lower rate is available if the parent is a listedcompany or if the holding company can show that its owner has areal business.

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