October 31 2019

SAT Highlights Six Changes in the Measures for the Administration of Non-Resident – Taxpayers’ Enjoyment of the Treatment under Tax Agreements

News from State Administration of Taxation (SAT)

The State Administration of Taxation released on October 21, 2019 the Measures for the Administration of Non-Resident Taxpayers' Enjoyment of the Treatment under Tax Agreements.

 

The document has four chapters, 25 articles and an attachment. The new regulation will be implemented from January 1, 2020, while the previous edition of the regulation, published in 2015 and revised in 2018, will be abolished.

According to the third article, non-resident taxpayers shall determine by themselves whether they are eligible for tax privileges, and file an application for such privileges. They should keep relevant information to prepare for future examinations.

The new regulation has reduced paperwork for non-resident taxpayers, who only have to fill one statement, provide such information as name and contact information and make a written statement.

The new regulation has clarified the legal obligations of non-resident taxpayers and withholding agent. Non-resident taxpayers determine whether they are eligible for tax privileges, and provide tax statements to the withholding agent; they assume corresponding legal responsibilities.

 

According to the 16th article, if a non-resident taxpayer is not eligible for tax privileges but it pays less or no tax as a result, tax agency shall collect the unpaid tax and hold the taxpayer accountable for delaying tax payment, unless the withholding agent is responsible for the delay because it did not act according to the 6th article.

The new regulation added "a clause of testing primary purpose" to prevent tax avoidance, and revised the definition of "non-resident taxpayer".