The new release directs local tax authorities not to focus on a very stringent set of criteria required to determine the beneficial ownership of dividends but, rather, to take the "totality of facts" approach on a case-by-case basis, including a dialogue with the taxpayer and a thorough understanding of the taxpayer's position.
KPMG China advises that this guidance was only issued to tax authorities of certain provinces, so it does not target all regions in China. However, this new guidance significantly relaxes the existing criteria, and provides clear guidance on the importance of documentation. This guidance is also apparently intended to promote Hong Kong as the preferred gateway for channeling investment into mainland China.
For more information, contact your KPMG adviser.
Information is current to June 04, 2013. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500