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
Posted in Business, Finance, Tax and Accounting, Legal and Regulatory
Tagged China Corporate Income Tax, China Dividend Income, China Equity Transfer Income, China Non-resident Enterprises, China Resident Enterprises, China Royalties Income, China Tax, China Tax Treaties, China Transfer Pricing
Mar. 1 – The profitability of multinational corporations (MNCs) will be the main focus of Chinese tax authorities during the annual inspection of related-party transactions in 2012, according to a recent report by Shanghai Securities News.
China’s State Administration of Taxation (SAT) aims to establish a comprehensive enterprise index system this year, which will contain nationwide information on both related-party transactions and contemporaneous documentation. Based on the system, the SAT will conduct comparative analyses on related-party transactions conducted in different industrial sectors, tax years, and geographical areas. Continue reading
Dec. 7 – An important area of focus during the Fifth International Taxation Conference in Beijing last week was the issue of transfer pricing and its implications for enterprises with subsidiaries in China – an area of regulation that is becoming increasingly complex. To help readers navigate these regulations, China Briefing dedicated its entire November edition to tackling the tax implications of cross-border transactions and transfer pricing documentation. Continue reading
Posted in Business, FDI and Foreign Trade, Finance, Tax and Accounting, Legal and Regulatory
Tagged China Cross-Border Transactions, China Documentation, China HQ, China Policy, China Regulatory, China Transfer Pricing, China WFOE
By Dezan Shira & Associates and Steven Carey at Transfer Pricing Associates
Nov. 8 – With the release of comprehensive transfer pricing regulations in early 2009, China’s tax authority – The State Administration of Taxation (SAT) – sent a very clear signal that it is serious about protecting its revenue base and actively enforcing the arm’s length principle for pricing of intragroup transactions, e.g. transactions between a headquarters overseas and its wholly foreign-owned enterprise (WFOE) in China.
These regulations introduced a mandatory requirement for taxpayers to prepare, submit and retain transfer pricing documentation to support the arm’s length nature of their related party transactions. Continue reading
Posted in Business, FDI and Foreign Trade, Featured, Finance, Tax and Accounting, Legal and Regulatory
Tagged Arm's Length Principle, China HQ, China Legal, China Regulatory, China Tax, China Transfer Pricing, China WFOE, State Administration of Taxation
Nov. 2 – The new issue of China Briefing magazine, titled Transfer Pricing and Cross-Border Inter-Company Transactions, is out now.
In this issue, we discuss cross-border inter-company transactions (pre and post-establishment) and the documentation you will need to submit to keep up with the increasingly powerful transfer pricing regulation implementation in China. The potential complexity involved in these transactions means that they are sources of confusion to many China investors.
We provide some pointers to help investors navigate these complex issues by first addressing the payment arrangements among HQs, WFOEs and clients in China, as well as each arrangement’s tax implications. We include the specific steps a WFOE in China has to undergo in order to remit funds between its headquarters and clients, and alert investors as to when transfer pricing issues and duplicate taxation issues are triggered. Continue reading
Posted in Business, Featured, Finance, Tax and Accounting, Legal and Regulatory
Tagged China Accounting, China Briefing Magazine, China Cash Management, China Company Expenses, China Company Transactions, China Cross-Border Inter-Company Transactions, China Documentation, China Finance, China Post-Establishment, China Pre-Establishment, China Transfer Pricing, China WFOE