Non-resident enterprises should be careful about their financial strategies to avoid unexpected and unnecessary tax exposure in China

Mar. 13 – China’s State Administration of Taxation (SAT) announced that its tax revenue from non-resident enterprises (NREs) reached RMB102.6 billion (US$16.16 billion) in 2011, exceeding RMB100 billion for the first time and reporting a 31.8 percent increase from a year earlier. Although this amount only accounts for roughly 1.1 percent of China’s total tax revenue last year, the high growth rate underscores the government’s increasing attention to this particular group of taxpayers.

Among a variety of taxes collected from NREs, corporate income tax (CIT) plays a major role and takes up around 85 percent of the group’s total tax imposition. NREs’ total CIT contributions in 2011 reached RMB87.2 billion, seeing a rapid increase of 38.4 percent from 2010. Continue reading →