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On October 14, 2019, the State Taxation Administration of the People’s Republic of China issued the Administrative Measures of Non-residents Claiming for Treatment under DTAs (hereinafter referred to as the “Measures”), which will come into effect on January 1 2020.
The new Measures is a revised version of the Administrative Measures of Non-residents Claiming for Treatment under DTAs issued in 2015. Main revisions include:
I. The revised definition of non-resident taxpayers is more precise. The original measures stipulates that: “Non-resident taxpayers refer to taxpayers (including non-resident enterprises and non-resident individuals) who are not Chinese tax residents according to domestic tax laws or tax treaties.” The new measures stipulates that: “Non-resident taxpayers refer to taxpayers who are tax residents of the other contracting party in accordance with the resident provisions of the tax agreement.”
II. The revised procedures of non-resident taxpayers claiming treatment under DTAs are “judging by taxpayers themselves, claiming for treatment, and retaining relevant materials for reference”, while the original one requires submission of materials when claiming.
III. The number of forms to be filled for non-resident taxpayers is significantly reduced to only one form, with less and easier content. Non-resident taxpayers only need to fill in the basic information such as name and contact information, and make a statement. The statement includes the following four aspects:
1. Tax resident status, that is, the tax resident of the other contracting party according to the laws and regulations of the contracting party and the resident provisions of the tax treaty;
2. The main purpose of the relevant arrangements and transactions is not to obtain treatment under DTAs;
3. Make judgement by taxpayers themselves, who shall assume the corresponding legal responsibility;
4. The relevant materials shall be collected and retained for reference according to the regulations, and be subject to the follow-up management by tax authorities.
5. The responsibilities of non-resident taxpayers and withholding agents are clarified.
