China Tax Newsletter

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Bulletin 7 on indirect property transfers

Chinese tax authorities have significantly strengthened their monitoring of cross-border transactions involving Chinese taxable property supported by the rapid development of digital tax administration systems and enhanced data analytics capabilities.

June 2025 - High-income individuals abroad

This article examines the current landscape of overseas individual income tax enforcement by national tax authorities, and explores effective compliance strategies for individuals potentially subject to cross-border taxation within legal and regulatory frameworks.

New "VAT Law of the PRC"

On 25 December 2024, the Standing Committee of PRC National People’s Congress passed the PRC Law on VAT (“the Law”). For the first time, VAT legislation is being enacted in the form of Law in China since its formal introduction in 1994. The new VAT Law shall be effective from 1 December 2026. The Law merely provides a high-level framework. As such, it is widely expected that PRC authorities...

New IIT Laws for the “Six-Year" Rule

The new IIT laws replaces the old "five-year" lookback period rule with a "six-year" rule to adapt to the new definition of resident that uses the 183-day test.

January 2022 - China Tax News

On 31 December 2021, the Ministry of Finance (“MOF”) and State Taxation Administration (“STA”) released two announcements (i.e., MOF STA Announcement [2021] No.42 and No.43) officially extending some preferential Individual Income Tax (“IIT”) policies

“聚焦粤港澳大湾区政策”主题系列之二 —— 珠海横琴：横琴粤澳深度合作区建设

粤港澳大湾区由香港、澳门2个特别行政区和广东省珠三角9市（广州、深圳、珠海、佛山、中山、东莞、肇庆、江门、惠州）组成，涉及到三个关税区、三种货币、三种法律制度。粤港澳三地，是我国开放程度最高、经济活力最强的区域之一。

The State Administration of Taxation (the “SAT”) has loosened up its requirements for non- residents of China in claiming the applicable tax treaty benefits, effective 1 January, 2020. The new measures were issued under SAT Public Notice (2019) No. 35 (the” PN 35”) in October 2019. Previously, under the SAT Public Notice (2015) No. 60 (the “PN 60”), pre-approval by the China tax authority in claiming tax treaty benefits was not required, but taxpayers were still required to fulfil the record-filing procedure. The PN 35 goes even further by allowing non - resident taxpayers to determine whether it is eligible for the relevant tax treaty benefits, i.e., a self-assessment of eligibility, and claim such tax treaty benefit as long as the relevant supporting documents are retained for inspection by the tax authority.
This new measure is one of the measures to optimize the taxation business environment and to “streamline administration, delegate powers and improve regulation and services”.

On 15 March, 2019, the National People’s Congress has passed the new Foreign Investment Law of PRC (the “Foreign Investment Law” or the “New Law”), which has come into force on 1 January, 2020. The new law marks the next level of Chinese government’s opening-up policy to enhance a more transparent business environment and to ensure that domestic and foreign enterprises compete on a level playing field, with equal treatment under the unified legislative rules and processes. It is also an attempt by the Chinese government to respond to international criticism from the US in light of the still on- going US-China Trade Negotiation. In particular, the Foreign Investment Law seeks to address common complaints from foreign businesses and governments, such as by explicitly banning forced technology transfers.

July 2019 – Mauritius: An Investment Gateway to Africa for Chinese Companies

Introduction

With its strategic geographic location between China and Africa and its stable regulatory environment, Mauritius looks set to strengthen its position as an investment gateway to Africa under China’s “Belt and Road” initiative.

This article discusses the tax factors that contribute to the success of Mauritius as a preferred investment jurisdiction and highlights some of the structuring possibilities available to Chinese entities looking to invest in Africa. These tax factors include a simple tax system, fast expanding double taxation tax agreements (“DTAs”), and being white-listed by the Organisation for Economic Cooperation and Development (“OECD”).

July 2019 - Economic Substance in Bermuda, the Cayman Islands and the BVI – Understanding the Requirements

In December 2018, Bermuda, Cayman Islands and the BVI, along with many other jurisdictions with low or zero rate of corporate income tax, passed legislations that introduced increased economic substance requirements for certain entities.

The legislations are designed to meet the requirements outlined by the European Union’s (“EU’s”) intergovernmental Code of Conduct Group (“CoCG”) on Business Taxation, which are aimed at jurisdictions with low or zero rate of corporate income tax.

May 2019 - China Adopts E-commerce Law – Its Tax Implications

Total e-commerce trade, including commodity and services trade amounted to RMB 29,160 billion for the year 2017, an 11.7% growth from the previous year. In respect of cross-border e-commerce on commodities, it amounted to RMB 90.2 billion, an 80.6% from 2016.

April 2019 - VAT input on domestic transportation

According to the Public Notice (2019) No. 39 jointly issued by SAT, the Ministry of Finance and General Administration of Customs on March 20th, 2019, transportation tickets including train tickets, air tickets and passenger tickets will be VAT deductable from April 1st , 2019 for companies.

April 2019 - 10% additional VAT input deduction

From April 1st, 2019 to December 31st, 2021, taxpayers of manufacturing and living service industries are allowed to enjoy a further 10% credit according to the current deductible input tax.

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