Corporate Income Tax Matters on Payments to Overseas Related Parties and how it will impact multinationals

The State Administration of Taxation released Announcement No. 16 on 18 March 2015. The new regulation sets out different criteria on non-deductibility of outbound payments, service fees and royalties to overseas related parties by Chinese companies.

SAT Fights Tax Avoidance with Investigation

Recently, the State Administration of Taxation (SAT) accelerated its commitment to fight tax avoidance in China. The tax authority decided to carry out investigation on Chinese subsidiaries sending money offshore via service fee or royalties to related entities. Indeed, the SAT issued the Circular of the General Office of State Administration of Taxation on Carrying out Anti-tax Avoidance Investigation on Large Sum External Payments on July 30, 2014 (“Circular No. 14-146”).


In a circular, jointly released by the Ministry of Finance (MoF), the State Administration of Taxation (SAT) and three other authorities, provides for better company income tax (CIT) policies offering further relaxation in the tax incentives to the qualified advanced technology services companies. The circular is effective from Jan 01, 2014 to Dec 31, 2018.

Key points:

China extends corporate income tax incentives for western region

Three years ago, China’s authorities- Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation issued circular 58 offering tax incentives to companies located in western part of China for its regional development. The circular provided for an extension of the tax incentives for China's western region from 1 January 2011 to 31 December 2020.

The Worst Chief Rep Ever


Note: Since this article was published, new regulations have been released for representative offices that will come into force on March 1st 2011. If you operate an RO or are considering opening one, please contact S.J. Grand for an obligation free appraisal of whether this is the right choice for your investment.

A case study in China tax compliance issues for representative offices. 

Beijing - Shanghai - Shenzhen - Hong Kong - Paris
Syndicate content

Copyright © 2009-2018 S.J.Grand. All rights reserved.