Management Of Non Resident Tax Agreements

The State Administration of Taxation today issued the "administrative measures for the treatment of non residents' enjoyment of tax agreements (Trial Implementation)", which will further standardize the procedures for taxpayers to apply for the treatment of tax agreement, and the procedures for tax authorities to accept applications for examination and approval. The measures shall be implemented from October 1, 2009.

Liu Heng, vice president of the tax School of Central University of Finance and Economics, told NetEase finance that the introduction of the measures is conducive to strengthening tax collection and management for non resident enterprises.

A tax agreement is a legally binding agreement signed between governments of States parties to promote economic cooperation and communication among States parties.

It can avoid double taxation, eliminate tax discrimination, and appropriately reduce tax burden. It can also effectively prevent pnational taxpayers from evasion of tax and promote healthy international tax order.

The treatment of tax agreement refers to the reduction or exemption of tax obligations according to the provisions of domestic tax laws in accordance with tax agreements.

The method provides detailed provisions for non residents to enjoy the application and filing report, approval and enforcement, and legal responsibilities of tax agreement treatment.

In order to ensure that there is no illegal tax avoidance behavior, the regulations stipulate that a certain number of samples are randomly selected from the non resident residents who enjoy the tax agreement treatment (including filing categories and approval categories) annually for examination, review or review.

The State Administration of Taxation has previously issued a circular calling for the pfer of domestic equity pactions to non resident enterprises, and timely collection of paction information, mastery of the economic essence of pactions, identification and prevention of the abuse of organization forms, abuse of tax shelters and abuses of tax agreements implemented by non resident enterprises, so as to prevent the loss of tax revenue.

At the same time, it will also play an important role in protecting the legitimate rights and interests of Chinese residents in overseas investment and operation. Chinese enterprises can actively strive for relevant rights and interests and avoid double taxation.

According to statistics, China's "going out" business reached US $52 billion 100 million in 2008, an increase of 96.7% over 2007, nearly doubled.

Last year, China's foreign contracted projects completed a turnover of 56 billion 600 million US dollars, and the new contract signed abroad was 104 billion 600 million dollars, an increase of about 35%.

It is understood that at present, China has signed 90 tax treaties with related countries (regions), and has basically formed a global tax agreement network. The vast majority of foreign investors in our country engaged in investment activities have basically signed tax agreements with China, and the legal protection function of the agreement is more important.

Under the dual pressure of financial crisis and ensuring growth, China's fiscal revenue pressure has increased, not tax revenue has become the main driving force for national financial growth.

In 1-7 months, the national fiscal revenue was 4 trillion and 67 billion 205 million yuan, down 0.5% from the same period last year, of which the tax revenue fell 3.5% over the same period, and the non tax revenue reached 520 billion 706 million yuan, with a year-on-year increase of 26%.