• Service: Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/31/2013

China - Revised tax clearance procedures for outbound (overseas) remittances 

July 31:  China’s State Administration of Taxation and the State Administration of Foreign Exchange jointly issued guidance that sets forth new tax registration requirements for Chinese residents making certain payments overseas—i.e., outbound remittances.

The new tax registration rules are effective 1 September 2013.

The guidance—Announcement 40 (released 9 July 2013)—pertains to cross-border service fees as well as other current account and capital account items under China’s foreign exchange regulations.

KPMG observation

Tax professionals have observed that Announcement 40 is a welcome development for multinational companies doing business in China because:

  • It eliminates an existing requirement that tax clearance must be secured before outbound remittance can be made.
  • It also may significantly expedite cash transfers from China to overseas for items covered by the circular.

Yet, as has also been observed, with the new tax records filing system, taxpayers may face greater penalty risks if they are unable to demonstrate that Chinese taxes in connection with the remittance were adequately settled.

Read a July 2013 report [PDF 365 KB] prepared by the KPMG member firm in China: Tax clearance procedure for certain outbound remittances overhauled

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