Wang Jingli

wangjingli0715@163.com

THE first session of an in-person English-language seminar series, titled “Seminar on Annual Individual Income Tax Reconciliation for Foreigners,” took place Thursday at The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen) in Longgang District.

Officials from the Shenzhen Tax Service and the State Taxation Administration delivered two presentations on individual income tax policies for foreigners and the tax treaty for teachers and researchers, respectively.

A staffer from the Municipal Science, Technology, and Innovation Bureau discussed Shenzhen’s work permit application process for foreigners.

Valentin Lanzrein, an associate professor at the CUHK-Shenzhen School of Music, said the seminar was very useful. “It gave me a clear idea of what I might have to look out for. I was hoping to get more help to learn how to do taxes by myself,” said Lanzrein.

Sophia Dooly, who works for Tsinghua Shenzhen International Graduate School, noted  the seminar was very helpful and she might be able to assist foreign colleagues in her office with tax administration paperwork now.

The second session of the  English seminar series will be held April 25 at the Shenzhen University Town International Conference Center.

Five online seminars on the same topic in Arabic, Russian, Korean, French and Japanese will be held from today to Wednesday. More information is available here: https://shenzhen.chinatax.gov.cn/nsrxt/.

Q&As on entitlement to tax treaty benefits for non-resident taxpayers

What is the subject of

entitlement to tax

treaty benefits?

“Non-resident taxpayers” refer to taxpayers who shall be tax residents of other contracting jurisdictions in accordance with the provisions on residents of DTAs, including taxpayers who are only the tax residents of the other contracting jurisdiction and taxpayers who are tax residents of both the other contracting jurisdiction and China according to the domestic tax laws, but shall be the tax residents of the other contracting jurisdiction according to the provisions on residents of DTAs.

How can non-resident

taxpayers obtain tax

treaty benefits?

Entitlement to tax treaty benefits for non-resident taxpayers shall be handled by means of “self-judgment of eligibility, declaration, and retention of relevant documentation for future reference.” In the case of self-declaration, where non-resident taxpayers make the judgment that they qualify for tax treaty benefits and need to obtain such benefits, they shall submit the Information Reporting Form for Entitlement to Tax Treaty Benefits for Non-resident Taxpayers (hereinafter referred to as “Information Reporting Form”) when making the declaration. And they shall then collect and retain relevant documentation for future reference in accordance with the provisions of the regulation.

In the case of withholding declaration by withholding agents, where non-resident taxpayers make the judgment that they qualify for tax treaty benefits and need to obtain such benefits, they shall fill out the Information Reporting Form based on the facts, take the initiative to submit it to the withholding agents, and collect and retain relevant documentation for future reference in accordance with the provisions of the regulation. There is a reminder that in cases of both self-declaration and withholding declaration, all relevant documentation for future reference are collected and retained by non-resident taxpayers for future reference.

What documentation

shall non-resident

taxpayers collect and

retain for future reference?

“Documentation retained for future reference” collected and retained by non-resident taxpayers include:

1) The tax resident certificates issued by the in-charge tax authorities of other contracting jurisdictions which certify the status of the non-resident taxpayers a s the tax residents of that contracting jurisdictions in the year, or the previous year, in which the income is derived; in the case of obtaining tax treaty benefits according to the provisions of the articles of international transport of the DTAs or the international transport agreements, the tax resident certificates may be replaced by other certificates which can prove that the status of the non-resident taxpayers is consistent with the provisions of the DTAs.

2) Documentation which prove the ownership, including contracts, agreements, resolutions of the board of directors or shareholders’ meetings, payment vouchers and others in relation to the incomes derived.

3) Relevant documentation proving the status of “beneficial owner” shall be retained in the case of claiming tax treaty benefits on dividends, interest and royalties.

4) Other documentation which in non-resident taxpayers’ belief can prove their qualification for tax treaty benefits.

What are the responsibilities of the non-resident taxpayers and the withholding agents?

Non-resident taxpayers shall make the judgment that they qualify for tax treaty benefits and need to obtain such benefits, they shall, based on the facts, fill out the Information Reporting Form, take the initiative to submit it to the withholding agents. Non-resident taxpayers shall be legally responsible for the faulty judgment to have obtained tax treaty benefits where they don’t qualify for, and thus have paid less or no tax.

Upon receiving the Information Reporting Form, the withholding agents shall confirm that the information filled in by non-resident taxpayers is complete; the withholding agents shall withhold tax in accordance with the provisions of domestic tax laws and the D A s . Withholding declarations shall be legally responsible for failing to make the withholding declarations or provide the relevant documentation in accordance with laws and regulations, where non-resident taxpayers obtained tax treaty benefits they don’t qualify for, and thus have paid less or no tax.

What are the statements

that non-resident

taxpayers need to make?

Non-resident taxpayers shall make statements in the following 4 aspects:

First, tax residents status, that is, taxpayers who shall be tax residents of other contracting jurisdictions in accordance with the domestic laws and provisions on residents of DTAs. If a non-resident taxpayer is not only the tax resident of another contracting jurisdictions in accordance with the domestic laws of that contracting jurisdictions, but also the tax resident of China according to the DTA, then it shall not be entitled to tax treaty benefits.

Second, the principal purpose of the relevant arrangement and transaction is not to obtain tax treaty benefits. According to the provisions on principal purpose test in tax treaties or the general anti-tax avoidance rules in the domestic tax laws, non-resident taxpayers shall not be entitled to tax treaty benefits when the principal purpose of the relevant arrangement and transaction is to obtain tax treaty benefits.

Third, non-resident taxpayers shall be legally responsible for their self-judgments and the faulty judgment to have obtained tax treaty benefits where they don’t qualify for.

Fourth, non-resident taxpayers shall collect and retain relevant documentation for future reference, and accept the follow-up administration by tax authorities. Where non-resident taxpayers fail to provide relevant documentation as requested by tax authorities, or evade, refuse or obstruct the follow-up investigations carried out by tax authorities, rendering it impossible for the in-charge tax authorities to verify whether those non-resident taxpayers are qualify for tax treaty benefits, those non-resident taxpayers shall be deemed as not qualifying for tax treaty benefits.

(Provided by SZ Tax Service)