PRC Non-Resident Enterprise Tax Series - Issue 04, June 2013
This publication follows on from two previous articles in this series, ‘Beneficial Ownership and Indirect Disposals’ published in March 2010, and ‘Indirect offshore, direct offshore and onshore disposals in an M&A context’ issued in April 2012, which focused on the increased rigour of the Chinese tax regime for taxing non-residents on passive types of income. This article turns to developments in the separate Chinese tax regime for taxing non-residents with a taxable presence in China on an assessment basis, specifically looking at a new tax circular the clarifications in which should help foreign enterprises to manage their Chinese taxable presence exposures from secondment arrangements.
The issuance of the clarifications is a welcome development as secondment tax exposures had been a major area of concern in recent years for foreign businesses operating in China. The details of the circular, and the manner in which management processes and contractual and financial arrangements covering secondments need to be tightened up in order to limit tax risks, is the focus of this edition of KPMG’s PRC Non-Resident Enterprise Tax Series.