Sep. 2026 - New IIT Policy on Dividend Income for Foreign‑National Individuals

Key changes

• Effective 1 September 2026, foreign national individuals deriving dividend income from foreign invested enterprises will no longer qualify for the previous temporary IIT exemption, and such income will be subject to IIT at a statutory rate of 20%

Withholding and compliance obligations

• Foreign invested enterprises are obligated to withhold IIT when making dividend payments to foreign national individuals, and file tax returns within 15 days of the month following payment
• If the foreign invested enterprise fails to perform withholding, the foreign national individual shall pay the corresponding tax by 30 June of the following year after income receipt
• Should the tax authorities issue a notice requiring payment within a specified period, the foreign national individual must comply accordingly

Points of attention

• Dividend distributions made to foreign national individual shareholders on or after 1 September 2026 will trigger the 20% IIT withholding obligation
• Dividends approved prior to the effective date but physically disbursed on or after 1 September 2026 are subject to the new rule, given that tax liability arises upon actual payment

Recommended action

• Companies with foreign national individual shareholders are advised to review upcoming dividend plans, update withholding tax procedures and maintain proper withholding and compliance documentation

We remain available should you have any questions. Please do not hesitate to reach out to your Forvis Mazars point of contact.

References

Ministry of Finance and State Administration of Taxation Announcement [2026] No. 27: Notice on Matters Concerning Individual Income Tax Policies on Dividends for Foreign-National Individuals