China’s Ministry of Finance and State Taxation Administration issued an announcement on Sept. 1, stating that from that date, dividends and bonus income received by foreign individuals from foreign-invested enterprises will be subject to personal income tax under the category of interest, dividends, and bonus income, at a 20% rate. The notice also sets out withholding and filing requirements for paying entities. When a foreign-invested enterprise pays such income, it must withhold and remit the tax in accordance with the law and file the tax return by the 15th day of the following month. If the enterprise fails to withhold the tax, the foreign individual must make up the payment by June 30 of the year following the year the income is obtained, unless the tax authority specifies another deadline. At the same time, provisions in a 1994 document that had exempted dividend and bonus income received by foreign individuals from tax have been repealed.
China’s Ministry of Finance and State Taxation Administration issued an announcement on Sept. 1, clarifying that effective the same day, dividends and bonus income received by foreign individuals from foreign-invested enterprises will be subject to personal income tax under the category of interest, dividends, and bonus income, at a 20% tax rate.
Under the notice, foreign-invested enterprises that make such payments must withhold and remit the tax in accordance with the law, and complete tax filing by the 15th day of the month following the payment. If the enterprise does not withhold the tax, the foreign individual must pay the tax by June 30 of the year after the income is received. If the tax authority sets a different payment deadline, that notified deadline will apply.
The announcement also says that provisions in a 1994 document concerning tax exemption on dividend and bonus income for foreign individuals are repealed at the same time.
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