In order to regulate management of payment of enterprise income tax by non-resident enterprises, in accordance with  “The Enterprise Income Tax Law of the People’s Republic of China ” (EITL) and its implementing regulations and “The Tax Collection and Administration Law of the People’s Republic of China ” (TCAL) and its implementing regulations, the State Administration of Taxation issued these Measures on January 22, 2009.

Non-resident enterprises subject to exchange and settlement

Non-resident enterprises which are established according to the laws of foreign countries or regions with management departments outside China and have set up offices or places in China, regardless of profit or loss, should participate in the exchange and settlement of the enteprise income tax according to Enterprise Income Tax Law and the provisions of these Meaures.

Non-resident enterprises not subject to exchange and settlement are:

1. those which undertake contracted projects or provide temporary services in China for less than a year and terminate business activities during the year and have settled the taxes.
2. enterprises which are de-registered during the period of exchange and settlement.
3. others which are exempted from participated in the exchange and settlement of the enterprise income tax in accordance with the approval of the competent tax authority.

Relevant Legal Obligations

1. Enterprises which fail to apply for annual income tax within the prescribed period without the approval of the competent tax authority to extend the time of payment or submit information that is incomplete or do not meet the requirements, should make up for the report within the prescribed period upon receipt of the “Notice of Correction in Limited Time” issued by the competent tax authority.
2. Where the enterprises fail to go through the exchange and settlement of the enterprise income tax within the prescribed period, apart from ordering them to going through in limited time, the competent tax authority will impose an overdue fine according to TCAL if the tax is overdue.
3. Where a dispute arises between an enterprise and tax authorities, the TCAL will apply.