Supplementary Notice on Issues about Administrative Measures on Nonresidents Enjoying Treatment under Tax Treaties

Posted by admin on July 27, 2010 under China Tax | Be the First to Comment

Guoshuihan No. 290 (2010)

Administrative Measures on Non-residents Enjoying Treatments under Tax treaties (Trail) (hear after refers to as the Measures) has been published and put into effect since Notice of SAT on distributing Administrative Measures on Non-residents Enjoying Treatments under Tax treaties (Trail), Guoshuifa No.124 (2009). Now supplementary implementing measures are noticed as follows:

1. State tax bureaus and local tax bureaus in Article 6 of the Measures include all tax authorities stated in Article 14 of Tax Collection and Management Law of People’s Republic of China.
2. Tax Identity Certificates which should be provided by Taxpayers according to Subparagraph 3, Paragraph 1 of Article 9 or Subparagraph 2, Paragraph 1 of Article 12, include Tax Identity Certificates documented by authorities of the other side of Tax treaties in following forms:

a) Relevant contents filled in Blank 13, Appendix 1 or Blank 25, Appendix 2 under Guoshuifa No.124 (2009).      

b) Special certificates documented independently.

III.    Non-residents could be exempted of submitting materials which have already been submitted, only for materials submitted to the same tax authority. Non-residents who should propose for approval application and recordation report to different authorities should submit relevant materials respectively.

1. When recording enjoyment of Agreement treatments before tax obligation declaration, according to Article 11 of the Measures, Blank 20 of “ Earning Amount or Taxable Income Amount” and Blank 21 of “Exemption and Reduction amount” of Recordation Report Form of Non-resident Enjoying Tax treaty Treatments shall be filled according to arrangements of the contract or estimated number; when declaring the recorded tax obligations by law, taxpayers or withholding agents should then fill Implementing Status Report of Non-resident Enjoying Tax treaty Treatments (see Appendix 3), to report the implementing status of recorded non residents’ Tax treaty enjoyments.
2. Withholding incomes requiring recordation in Article 13, which refer to contents of Article 11, do not include incomes requiring approval according to Article 7 of the Measures, to which the withholding at source applies in conformity to laws and regulations within China.

When implementing Tax treaties treatments which need to be recorded, withholding agents should complete recordation process under Article 13 of the Measures no matter taxpayers have already submit relevant materials or not. If taxpayers refuse to provide relevant materials, withholding agents should not implement the Tax treaty treatments.

1. “Working time limit referred to in Article 16 of the Measures” mentioned in Paragraph 2, Article 17 refers that prescribed by Subparagraph 1, Paragraph 1 of Article 16, that is, tax authorities in charge of reported cases under Article 17 should make their decision in 20 working days and inform approval authority directly / rank by rank, or complete the re-report process.
2. Article 2 of Notice of SAT on Interpreting and Implementing Provisions of Arrangements for Avoidance of Double Taxation between Inland and HK SAR, Guoshuihan No.381 (1998), and Paragraph 3, Article 3 of Notice of SAT on Interpreting and Implementing Provisions of Arrangements for Avoidance of Double Taxation and prevention of fiscal evasion between Inland and HK SAR, Guoshuihan No.403 (2007), are rules based on Agreements of tax arrangements which formed by negotiation between SAT and Tax Bureau of HK SAR. According to Article 44 of the Measures, when conflict occurs, these 2 provisions should be complied.
3. Concerned Income Types and their Codes in filling instruction of Appendix 1, 2 and 5 of Guoshuifa No.124 (2009) should be changed into: Business Profits-7, Dividends-10, Interests-11, Royalties-12, Property Incomes-13, Remuneration for Independent Service-14, Remuneration for Dependent Service-15, Incomes of Artists or Sportsmen-17, Retirement Allowance-18, Education or Training Fees paid to Students-20, Other Incomes-21. See modified Forms in Appendix 1, 2 and 3.
4. “Seal or signature of tax authority or its delegator” in Blank 26, Appendix 2 of Guoshuifa No.124. (2009) should be changed into “Seal or signature of acceptance tax authority or its delegator”. “Acceptance tax authority” refers to the tax authority who receives approval applications of non-residents or who has the right to approve.
5. “The recent one year” in Blank 15-21, Appendix 3 of Guoshuifa No.124, (2009) refers to the year before the applicant gains his incomes.
6. Report Form for Approval and Implementing Results of Non-residents Enjoying Tax treaty Treatments of Appendix 5, and Summary Form for Non-residents Enjoying Tax treaty Treatments (by Country) of Appendix 6 in Guoshuifa No.124 (2009) shall be replaced by Report Form for Implementing Results of Non-residents Enjoying Tax treaty Treatments of Appendix 3, and Summary Form for Implementing results of Non-residents Enjoying Tax treaty Treatments of Appendix 4 in this Notice.
7. All report forms under the Measures should be in duplicate, one retained by the applicant and the other for the tax authority.
8. Local authorities shall conduct annual summary of implementing results of Tax treaties, fill the summary forms and submit to SAT before end of next March.