The latest edition of China Tax and Financial Planning Briefing from Thomson Reuters is designed to help CFOs, corporate tax directors, and counsel determine the business impact of China's tax and financial regulations.
The report, which features case studies and analyses from leading practitioners, is published under the company's WorldTrade Executive (WTE) brand.
"China's governmental agencies are stepping up tax compliance requirements, cracking down on tax avoidance, expanding tax types in the region, increasing the burden of the merger process, and more," said Gary Brown, senior director of WTE. "Corporate professionals need to understand China's policies to make lucrative business decisions and avoid surprises that can cause severe harm to the enterprise from tax and financial ramifications."
The briefing notes that the State Administration of Taxation (SAT) has announced a roadmap for international taxation policies which suggests taxpayers should expect more tax compliance requirements, more disclosure and reporting obligations and more inspections for those graded as high tax risk.
Another topic covered is China's increased enforcement of anti-avoidance regulations which is yielding record tax collections on indirect transfers.
Treaty considerations are also highlighted. The tax authorities have imposed strict conditions on foreign investors before they can be eligible to claim the favored withholding tax found in the tax treaties entered into by the People's Republic of China, including the tax arrangement with Hong Kong.
The report explains China's testing of a value added tax (VAT) and advises businesses to assess and calculate variable tax positions based on their industries, position as provider or customer, applicable rate, and the input VAT under the new program. With this information, a business can make an informed decision on whether it is more advantageous to be a general VAT payer or small-scale VAT payer.
Other topics in the briefing include:
- A discussion of the first ever transfer pricing related advance ruling in Hong Kong.
- The SAT's new pre-settlement mechanism for tax disputes.
- New advice on filing merger clearance applications, which contain an increase in the information and document production obligations of the merging parties.
- The national security review, to which many merger and acquisition transactions are subjected.
- Important considerations when protecting a trademark in China.
WorldTrade Executive, a Thomson Reuters brand, specializes in providing reports and periodicals concerning tax and legal issues in international markets. Related publications include Practical China Tax and Finance Strategies and Practical Asian Tax Strategies.