CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. New Chinese Corporate Tax Regime May Catch Foreign Investors

New Chinese Corporate Tax Regime May Catch Foreign Investors

by Mary Swire, for LawAndTax-News.com, Hong Kong

30 May 2007


Under China's new Corporate Income Tax Law, due to come into effect on 1st January, 2008, holding companies for Chinese investments should be based in tax-treaty countries in order to escape double taxation, says Danny Po of PricewaterhouseCoopers in Hong Kong.

Mr Po, PwC's Greater China M&A Tax Services partner, says that while under the current regime, known as the Foreign Enterprise Income Tax ("FEIT") law, withholding tax of 20% on dividends from foreign investment enterprises to their foreign owners is exempted altogether or reduced (for other passive income) from 20% to 10%, the new CIT Law states that the standard WHT rate will be 20%. It is silent on whether or not the existing withholding tax exemptions will be kept intact.

In addition, the new law will contain a generalized anti-avoidance provision which may catch income or capital flows to overseas investors, plus new rules to clarify corporate tax residence which may cover firms whose executives habitually spend time inside China.

Detailed Implementation Rules for the new CIT Law are due to be issued later in 2007, and may clarify matters, but Mr Po says that in the interim, investors should make sure that their offshore holding companies are established in countries, such as Hong Kong, with favourable Mainland tax treaty arrangements.

On the other hand, says Mr Po, venture capital investors can still consider setting up a venture capital enterprise inside China to take advantage of sectoral tax incentives which are expected to be introduced under the new CIT Law.


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »