Withholding Tax in ChinaUpdated Regulations

Application Procedures for

Approval from Tax Bureaus

WHEN should you submit an application?

• Before you make any foreign payments aboard for interest, royalties, service fees, contracted work, etc…

• Before actual costs or expenses are recorded by the company.

Note: Banks require a Tax Certificate from both national and local tax bureau before a overseas payment exceeding $30,000 USD can be made.

If overseas payment is less than $30,000 USD, approval from the tax bureau is not required.

Application Procedure for Approval

Application Procedure for Approval

• The payer is a company based in China;– Dividend;– Interest;– Property Transfer;– Royalty.

• If the payer does not make an application, the receiver of funds may apply for approval themselves, or appoint an agent to withhold taxes on their behalf.

- Service fee;

- Contract work.

WHO can submit an application?

Application Procedure for Approval

WHERE to submit the application?

• First, submit to the National Tax Bureau

• Then, to Local Tax Bureau

Required Documents• Record of Contract Registration Form for Enterprise Income Withholding

Tax;

• Application Letter that specifies contract signing and expiry date, contract amount, currency, exchange rate, party responsible for tax payment, tax calculation sheet, etc…

• Business License (original and copy)

• Tax Registration Certificate (original and copy)

• Contract(s) and invoice(s) in Chinese and English (original and copy);

• Application for treatment under bilateral tax agreements (if applicable);

• Board resolution(s) for dividend payment(s) (if applicable);

• Annual Audit Report(s) for year(s) of interest payment (if applicable);

• Explanation for any discrepancies in above payments (if applicable).

Application Process1. Prepare required documentation. Document required are similar

for both national and local tax bureaus;

2. Submit application to National Tax Bureau for preliminary review;

3. If application is in order, pay taxes within 7 days and obtain proof of tax payment from bank. E.g. payment receipt.

4. Submit application and proof of tax payment receipt to National Tax Bureau for approval to obtain Tax Certificate;

5. Once Tax Certificate is obtained, submit certificate with above required documents to Local Tax Bureau.

6. Once Tax Certificate has been certified by the local tax bureau, the Tax Certificate can be submitted to bank to make overseas payment.

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