(Source: https://pltfrm.com.cn)
Foreign businesses operating in China must adhere to a range of compliance requirements regarding tax filing. The specifics can vary depending on the nature of the business, the scope of operations, and the types of taxes applicable. As of my last update in April 2023, the key compliance requirements generally include:
- Tax Registration: Foreign businesses must register with the Chinese tax authorities. This involves obtaining a tax registration certificate, which is essential for all tax-related matters.
- Filing Corporate Income Tax (CIT): Foreign enterprises are required to file CIT returns annually. The standard CIT rate is 25%, but it can vary for different entities and industries. Companies may need to provide detailed financial statements and other relevant documentation.
- Value Added Tax (VAT) Filing: Businesses subject to VAT must file monthly or quarterly VAT returns, depending on their size and nature. VAT rates in China vary by industry, with standard rates being 13% and 9%, and a reduced rate of 6% for certain services.
- Withholding Tax Compliance: For payments made to non-resident enterprises, such as dividends, royalties, and interest, foreign businesses must withhold tax at source and remit it to the Chinese tax authorities.
- Transfer Pricing Documentation: China enforces strict transfer pricing regulations. Foreign businesses engaged in transactions with related parties must maintain and file comprehensive transfer pricing documentation to demonstrate that their transactions meet the arm’s length principle.
- Annual Audit Report: Companies are usually required to submit an annual audit report prepared by a qualified auditor. This report forms the basis for the annual corporate income tax reconciliation.
- Individual Income Tax (IIT) for Employees: If the foreign business has employees in China, it must withhold and pay individual income tax on behalf of its employees. The company is responsible for calculating, withholding, and paying the tax to the relevant authorities.
- Social Insurance Contributions: Foreign businesses are required to make social insurance contributions for their employees in China, which includes pension, medical insurance, unemployment insurance, work-related injury insurance, and maternity insurance.
- Stamp Duty: Stamp duty applies to various legal documents in China, including contracts, property leasing agreements, and books of account. Companies must affix stamps to these documents in compliance with the stamp duty regulations.
- Special Tax Adjustments: This includes compliance with anti-avoidance rules and responding to any special tax adjustments imposed by the Chinese tax authorities.
- Filing Deadlines: Adhering to all tax filing deadlines is crucial to avoid penalties. These deadlines vary for different types of taxes and reports.
- Electronic Filing: China is increasingly moving towards electronic filing systems for tax returns and other reporting requirements.
Foreign businesses must keep abreast of changes in tax laws and regulations, as China frequently updates its tax policies. It’s highly recommended for foreign entities to seek advice and assistance from local tax professionals or consultants who are familiar with the Chinese tax system to ensure full compliance and to navigate the complexities of the tax regime effectively.
PLTFRM is an international brand consulting agency that works with companies such as Red, Tiktok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries exports in China account for 97% of the total exports in Asia. Contact us and we will help you find the best China e-commerce platform for you. Search pltfrm for a free consultation!
