As against the six month period, the new agreement envisages that a building site, assembly or installation project, or supervisory activities in connection therewith, will be construed as a PE when it continues for a period of more than 12 months. The PE definition has also introduced the concept of a service PE.

The new DTA also cuts the withholding tax on dividends paid out by Chinese companies to 5 percent from 10 percent, if the dividend recipients hold at least 25 percent of shares in the Chinese company. The withholding tax rate remains at 10 percent in all other cases. Amendments have also been made to tax rates on royalties for the use of, or the right to use, industrial, commercial or scientific equipment, from 7 percent to 6 percent.

The two governments have also revised the Article on capital gains tax (CGT). Article 13 clarifies that the alienation of property will be taxable only in the state of which the alienator is resident, except in certain situations.

Gains derived by a U.K. resident from the alienation of shares in a company resident in China if, at any time during the 12-month period preceding the alienation, the U.K. resident owned at least 25 percent of the shares in the China resident company.

In the new DTAA, the technical fees will be covered in part by the Royalties article and, if not considered to be business profit, in part by the Other Income article. The Other Income article is newly added provision.