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Administrative Measures for Non-resident Taxpayers Claiming Tax Treaty Benefits

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Administrative Measures for Non-resident Taxpayers Claiming Tax Treaty Benefits

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State Administration of Taxation (SAT) Public Notice [2015] No.60 has introduced a new mechanism of self-assessment on the eligibility for tax treaty benefits (reduced taxation or exemption under the relevant tax treaties) by non-resident taxpayers.

The pre-approval process or record-filing acknowledgement from the Chinese tax authorities is no longer necessary. Instead, non-resident taxpayers and their withholding agents will be required to file certain prescribed forms and other supporting documents when performing tax filing to justify their claims for the tax treaty benefits.

Refinement to Super-deduction Policy for Research and Development Expenses

Caishui [2015] No.119 (“Circular 119”) provides further clarification and refinement in relation to the scope of R&D activities and R&D expenses, financial accounting and administration, and record-filing requirements. It clarifies the detailed measures implemented regarding the super-deduction of R&D expenses for the purpose of corporate income tax assessment.

Application of Zero Value Added Tax Rate to Certain Services

Caishui [2015] No.118 (“Circular 118”) states that domestic enterprises or individuals providing the following services to companies overseas can adopt the zero VAT rate:

  • Production and distribution of radio and television programmes;
  • Technology transfer services, software services, circuit design and testing services, information system services, operation process management services, and energy management services; and
  • Offshore outsourcing services, including information technology outsourcing (ITO), business process outsourcing (BPO), and knowledge process outsourcing (KPO).

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