China’s tax authorities issued draft guidance measures setting forth the principles and procedures for Chinese financial institutions to apply in identifying and collecting the financial accounts of non-residents for purposes of the automatic exchange of financial information in tax matters (AEOI) standard.
The State Administration of Taxation circulated the draft guidance—known in English as “Measures on the due diligence of non-resident financial account information in tax matters”—for purposes of obtaining comments from the public. The draft guidance measures have seven sections, and 43 clauses that define certain terms (such as “financial institution,” “financial asset,” “financial account,” “non-resident financial account,” and so forth). Other items included in the draft guidance measures provide a timetable and the requirements for due diligence to be conducted by financial institutions with respect to financial accounts. Information collected by these financial institutions will be transmitted to China’s State Administration of Taxation which then will, in turn, exchange that information with the competent tax authorities in the jurisdiction where the account holder is a tax resident.
The main goal of the draft guidance measures is to set out the principles and procedures for financial institutions to follow in identifying non-resident accounts and in the collection of the related financial information. The final guidance measures are expected to be effective 1 January 2017 once final rules are released.
Read a November 2016 report prepared by the KPMG member firm in China: Public Consultation for the Draft Measures on the Due Diligence of Non-resident Financial Account Information in Tax Matters
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