IN a bid to further promote the expansion of foreign investment in Shenzhen, the city’s taxation bureau and Invest Shenzhen, the organization assigned by the municipal government with the task of attracting investment, jointly organized a lecture for foreign-invested companies on tax policy Friday to encourage foreign investors to expand their investment in the city.
The organizers also interpreted relevant policies on tax reduction and the strategic optimization of the business environment for foreign investors.
On Dec. 21, 2017, the Ministry of Finance, State Administration of Taxation, National Development and Reform Commission, and Ministry of Commerce jointly issued the Notice Regarding the Provisional Deferral Treatment for Withholding Tax (WHT) on Distributed Profits used for Direct Reinvestment by Foreign Investors, which clarified the criteria for withholding tax deferral treatment on dividends for foreign investment in encouraged sectors in China.
On Sept. 30 this year, the four authorities jointly released a circular to further expand the scope of the preferential investment policy to all nonprohibited foreign investment projects and fields.
In his speech, Zhu Yingjie with the international tax administration department of the Shenzhen Taxation Bureau, said the deferral of collecting WHT does not equate to a tax exemption, but that the payment of the tax can be postponed for a certain period of time.
It is said that the tax deferral will enable taxpayers to use the money without compensation or paying interest, which is conducive to maintaining turnover.
Liu Henghua, general manger of Valeo Automobile Control Co. Ltd., said his biggest gain from this lecture was hearing a detailed introduction to the scope of the tax deferral policy.
“In the future, our retained profits will be used for reinvestment in Shenzhen projects without withholding the tax for the time being, which has injected new momentum into the continued expansion of our R&D investment and domestic strategic investment,” Liu added.
According to statistics from the taxation bureau, a total of 355,327 Shenzhen enterprises enjoyed preferential policies regarding enterprise income tax last year, an increase of 8 percent year on year. Meanwhile, the total amount of tax reduction reached 135.2 billion yuan (US$19.48 billion), an increase of 21 percent compared with a year ago.
Up to now, Shenzhen Taxation Bureau has fully implemented the tax deferral policy for the reinvestments of overseas investors, withholding more than 930 million yuan in taxes for nine overseas investors in the city and offering 4 billion yuan in tax reduction and exemption for nonresident enterprises from 78 countries and regions.
The Shenzhen Taxation Bureau also highlighted 108 specific measures to optimize the business environment and ease the burden on taxpayers. Tax policy issues of general concern to foreign businessmen, such as how foreigners pay individual taxes in Shenzhen and what tax incentives are provided in Qianhai, were expounded on by the bureau.
http://www.chinabusinessreview.com/withholding-tax-deferral-for-foreign-investment-in-china/