New Issue of China Briefing: Understanding Permanent Establishments in China
May 2 – The new issue of China Briefing Magazine, titled Understanding Permanent Establishments in China, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the month of May.
With more and more foreign enterprises conducting business in China, the tax liabilities resulting from business activities in the country are becoming an issue of key concern. Many foreign enterprises doing business in China are unaware that their business activities here may constitute a permanent establishment (“PE”) and are thus subject to corporate income tax.
In recent years, China’s tax authorities have tightened the tax administration of secondment arrangements in which the HQ sends staff to work in China. Overseas parent companies might be challenged that their actions constitute provision of services to their China subsidiary and hence creation of a Service PE in China.
This month’s China Briefing Magazine casts some light on this subject by discussing in the first article the circumstances triggering a PE in China, focusing on Service PEs. In the second article, we discuss the tax implications for a non-resident enterprise where its activities in China constitute a Service PE in the country.
The taxes imposed include corporate income tax, individual income tax, turnover taxes including business tax and value-added tax, as well as surcharges. At the end of the magazine, we also address the taxation of representative offices in China and list the countries and regions that have DTAs with China. We hope that a better understanding of this subject will allow foreign investors to plan their activities in China more efficiently.
In this issue:
- Triggering Permanent Establishment Status
- Tax Implications of a Service Permanent Establishment
- Does a Representative Office Constitute a Permanent Establishment?
- Countries with Double Taxation Avoidance Agreements with China
Understanding Permanent Establishments in China is out now and immediately available as a complimentary PDF download on the Asia Briefing Bookstore.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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