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Opinions of the State Administration of Taxation upon Doing Well in the Taxation Service and Management for the Overseas Investments
of Chinese Enterprises
Guo Shui Fa [2007] No. 32
The state taxation bureaus and local taxation bureaus of each province, autonomous region, municipality directly under the Central
Government, and city specifically designated in the state plan,
For the purpose of implementing the instructions and ideas of the Central Government and the State Council regarding the encouragement
and regulation of the overseas investments of Chinese enterprises, and exercising the functions of tax, as regards doing well in
the taxation service and management for the overseas investments of Chinese enterprises, we hereby put forward the following opinions:
1.
The important role the tax plays in the encouragement and regulation of overseas investments of Chinese enterprises shall be realized
sufficiently
The Central Government and the State Council, in light of the new tendency for opening to the outside world and the overall situation
for China’s economic development, makes the “going out” strategy for encouraging and regulating overseas investments of Chinese enterprises,
which is an important strategic measure and favors making full use of both international and domestic resources and markets, widening
the room for development of national economy, developing Chinese enterprises in furious international competition, and ensuring a
sustainable and fast development of national economy. Taxation is an important means for structuring incomes, regulating the economy
and adjusting the allocation. It plays an important promotion role in encouraging and regulating overseas investments of Chinese
enterprises.
In recent years, for the purpose of cooperating with the implementation of the “going out” strategy, China has constantly improved
its tax policies, constituted and carried out the interim measures for calculating and collecting taxes on overseas incomes, and
has preliminarily set down the taxation management rules for the overseas investments of Chinese enterprises, made more effort on
concluding and carrying out tax treaties, set up the mechanism of exchanging the tax-related information, regulated mutual negotiation
procedures, provided Chinese overseas investment enterprises with good taxation services on settling tax disputes, and protected
the interests of such enterprises preferably. However, in comparison with the requirements for encouraging and regulating the overseas
investments of Chinese enterprises and administrating tax scientifically and carefully, the taxation service and management on the
overseas investments of Chinese enterprises still have a certain gap and thus need further improving and regulating.
Therefore, the taxation authorities at each level shall further improve the awareness of the importance of taxation service and management
on the overseas investments of Chinese enterprises, and shall, according to the requirements for optimizing services, improving policies,
regulating management and reinforcing cooperation, strengthening organization and leadership, specify functions, adopt practical
measures, and do well in the related work.
2.
Providing good taxation services for Chinese enterprises’ overseas investments
As the strategy of “going out” is implemented in the initial stage by China, and the overseas investments and the anti-risk ability
of Chinese enterprises are rather weak, the taxation authorities at each level shall comply with the principle of conducting the
management in the services and embodying the services in the management, provide a good taxation environment for Chinese overseas
investment enterprises in accordance with their requirements for taxation services, and have the taxation work defer to and serve
for the overall condition of China’s strategy of “going out”.
(1)
Constituting uniform taxation service guidelines for Chinese enterprises’ overseas investments. For encouraging and regulating Chinese
enterprises’ overseas investments, the aforesaid uniform taxation service guidelines will play an important guiding role, which mainly
include: tax treaties concluded between the governments of China and foreign countries as well as the interpretations thereof; current
tax policies and taxation administrative provisions of China concerning overseas investments and the rendering of labor services
to abroad; tax systems; and foreign countries’ laws on the administration of tax levying. The aforesaid uniform taxation service
guidelines will focus on offering countermeasures for tax-related disputes occurring when Chinese enterprises invest overseas and
render labor services abroad, the deduction measures when calculating and collecting taxes on overseas incomes, measures for reducing
and exempting overseas taxes, as well as the measures for making up the losses from overseas businesses, etc. The State Administration
of Taxation will take charge of Constituting uniform normalized taxation service guidelines for Chinese enterprises’ overseas investments,
and all the regions may, in light of their respective actuality and by referring to the said uniform taxation service guidelines,
constitute more pertinent service guidelines.
(2)
Smoothing out the tax propaganda and consultancy channels for Chinese enterprises’ overseas investments. The State Administration
of Taxation has opened a special column for propagandizing the tax for Chinese enterprises’ overseas investments at its portal so
as to publicize its taxation service guidelines; and all state taxation bureaus and local taxation bureaus at the provincial level
shall open a corresponding special propaganda and consultancy column at their respective portals, so as to help Chinese enterprises
timely know and grasp the tax-related laws, regulations, measures for administrating tax collection for overseas investments, and
conduct the taxation guidance for Chinese enterprises’ overseas investments. A special consultancy seat may be opened by any region
with a large number of Chinese overseas investment enterprises at the comprehensive service window in its tax service hall, so as
to provide the enterprises with fast, convenient and professional taxation consultancy services.
(3)
Reinforcing the taxation tutorship for Chinese overseas investment enterprises. The taxation authorities at each level shall conduct
various forms of taxation tutorship, and at a regular basis, hold special taxation trainings or special policy consultation meetings
to answer tax questions that concern Chinese overseas investment enterprises and provide more pertinent taxation services for such
enterprises. Tax functionaries in the competent enterprise taxation authority shall regularly visit such enterprises, acquaint with
and answer their tax problems encountered in the process of their overseas investments.
3.
Implementing and perfecting the tax policies for Chinese enterprises’ overseas investments
The implementation and perfection of taxation policies for Chinese enterprises’ overseas investments is an important measure for safeguarding
the encouragement and regulation of Chinese enterprises’ overseas investments. For which, a good job should be done in two aspects
as follows:
(1)
Making more efforts to implementing the tax policies for Chinese enterprises’ overseas investments. Each region shall, in accordance
with the Income Tax Law on Foreign-invested Enterprises and Foreign Enterprises and the detailed rules for the implementation thereof,
the Interim Regulation Concerning the Enterprise Income Tax and the detailed rules for the implementation thereof, the tax treaties
and the related provisions of foreign countries on calculating and levying incomes taxes, conduct an inspection on the implementation
of related tax policies for Chinese enterprises’ overseas investments, seriously implement the policies for calculating overseas
incomes, making up the losses, calculating taxable incomes, deducting overseas taxes as well as reducing and exempting overseas taxes,
etc., and handle the problems of non-fulfillment and ineffective fulfillment; and as regards the goods purchased by Chinese overseas
investment enterprises and shipped abroad for investments, each region shall, according to current provisions on the export tax refund,
timely handle the export tax refund.
(2)
Reinforcing the investigation and research, and perfecting the related tax policies. Each region shall increase the investigation
and research efforts for the implementation conditions of current tax policies for overseas investments, including the business situation
for the overseas investments, the implementation of related tax policies, particularly, the problems faced during the implementation,
the reasons for such problems, the settlement opinions and suggestions, and shall report them to the State Administration of Taxation
in a timely manner.
4.
Regulating and strengthening the administration of tax collection for Chinese enterprises’ overseas investments
As regards Chinese overseas investment enterprises, each region shall control its domestic tax sources, and at the same time, adopt
measures for reinforcing the administration of its overseas tax sources, as well as set down and implement the normalized tax management
rules and operational rules.
(1)
Setting down operational rules for administrating tax collection on Chinese enterprises’ overseas incomes. The State Administration
of Taxation will constitute the operational rules for administrating tax collection on overseas incomes and guide the grass-roots
taxation authorities to conduct the work according to current overseas income tax policies and management requirements as well as
the features of the occurrence of overseas incomes. Each region shall set down specific implementation measures by considering their
respective situation.
(2)
Regulating and strengthening the permanent household management. In accordance with legal provisions, an enterprise shall, when making
any overseas investment, go through the tax alteration registration in time at the competent tax authority; and each region shall,
on the basis of comprehensively changing tax registration certificates, conduct the inspections of the conditions on going through
the tax registration by Chinese overseas investment enterprises, keep informed of the enterprises’ overseas investments, and desist
collecting or administrating taxes by omission.
(3)
Regulating and strengthening the declaration of overseas incomes. Chinese overseas investment enterprises shall, in their annual tax
declarations, exactly reflect their overseas business profits, dividends, interests, royalties, property proceeds and other incomes;
and when making annual declaration of incomes tax, such an enterprise shall report to the competent taxation authority the organizational
structure and business situation, financial systems, financial statements for its overseas investment as well as the account auditing
report made by the certified accountants of the country where the investment is put. Each region shall urge the enterprises to fulfill
the obligation of reporting related materials and making tax declaration in time.
(4)
Regulating and strengthening the taxation inspection of overseas incomes. As regards main contents and features of the taxation administration
of Chinese enterprises’ overseas investments, all regions shall constitute operational rules for overseas income tax payment evaluation
and taxation inspection, find out and deal with tax risks in Chinese enterprises’ overseas investments in a timely manner; meanwhile,
shall make more efforts on the anti-tax avoidance of Chinese overseas investment enterprises, and focus on the audit of the incomes
from tax paradises and overseas subsidiaries subject to Chinese parent companies.
5.
Reinforcing the coordination and cooperation with all departments concerned
The taxation service and management on Chinese enterprises’ overseas investments involve the coordination and cooperation with plural
internal departments of taxation authorities, cannot run without the care and support of departments concerned in the governments
at each level, and still need the support and coordination of the taxation authorities around the world and related international
organizations. For doing a good job in the taxation service and management regarding the overseas investments of Chinese enterprises,
the reinforcement of departmental cooperation and even international cooperation plays an important role.
(1)
Reinforcing the internal cooperation with taxation authorities. As the taxation service and management on Chinese enterprises’ overseas
investments involve several internal departments of taxation authorities, the leaders thereof at each level shall pay more attention,
make overall plans and consider each factor, divide their work reasonably, specify their duties. And the international taxation management
department shall take the lead and the functions of other departments shall be exerted, so as to form a working situation that all
departments concerned are of one mind and make concerted efforts.
(2)
Reinforcing the cooperation with governmental departments concerned. The taxation authorities at each level shall set up an information
communication mechanism with the departments of commerce, foreign exchange, development and reform, customs, and trade promotion,
etc., so as to regularly exchange the information on Chinese enterprises’ overseas investments and coordinate to reinforce the cooperation
with other departments.
(3)
Reinforcing the international taxation cooperation. The State Administration of Taxation will further strengthen the cooperation with
and actively exchange information with the taxation authorities of the countries where Chinese enterprises invest; build a mutual
aid mechanism of tax collection administration with the countries where many Chinese enterprises invest, conduct taxation investigations
and the evidence obtaining work on Chinese enterprises’ overseas investments through authorized delegates’ visits and taxation inspections
for the same period; and will also reinforce the cooperation with international organizations such as UNDP and OECD, and bring into
full play such international conferences and mechanisms as the SGATAR meeting and the meeting of tax directors of 10 countries China
has joined in. All regions shall timely provide the State Administration of Taxation with the tax information and materials, submit
the business demands for international taxation cooperation, and do well in all work in relation to international taxation cooperation
in light of the uniform requirements made by the State Administration of Taxation.
All regions shall, prior to the end of October 2007, report its implementation of the present Opinions to the State Administration
of Taxation (International Taxation Department).
The State Administration of Taxation
March 20, 2007
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