New tax regulation of trans-regional business


Date:  2017-09-30    Autor:   Yi WANG

Our clients always meet followed questions: If theCompany got business operation out of the registered area, should the Company apply for tax registration? Whom should the Company declare to?

In September 2017, the State Administration of Taxation (“SAT”) released “Notice of innovating administration regulations about trans-regional tax issues” (ShuiZongFa [2017] No.103). This is aninnovation driven by the tax authority, based on the development of information technology, to relieve the burden of taxpayers to deal with tax issues and to increase their convenience. The new regulation pilot tests since September 30 and enforces formally since October 30. With the implementation of the new regulation, the current tax administration for outbound business activities will be changed a lot.

Under the new regulation, the main procedures of trans-regionaltax issues for taxpayers include:

a.    Before the trans-provinces business activities start, taxpayers shall fill in “Report of trans-regional tax issues” for the state tax authority where its organization locates;

b.    When the first time dealing with tax issues in the business location, taxpayers shall apply for Inspection to the state tax authority where its business activities are performed.

c.    If the contract is extended, taxpayers can apply for extension of inspection to the tax authority either its organization or the business activities locate.

d.    After the trans-regional business activities are done, taxpayers shall pay off all the taxes, complete other tax issues, and fill in “Feedback of tax issues in the business location” to the state tax authority where the business activities are performed.

The comparison of the new regulation and the old one is as follows:

To be compare

New regulation

Old regulation

Name of the tax issue

Inspection  administration of trans-regional tax issues

Tax administration  for outbound business activities

Tax certificate

Tax  authority does not verify or issue certificate. Taxpayer fills in “Report of  trans-regional tax issues”

Tax  authority verifies and issue “tax control certificates for outbound business  activities”.

Implementation on line

Taxpayer can fill in “Report of trans-regional tax  issues” on line, through the taxation system.

Normally  taxpayer is required to apply certificate on the counter of tax authority.

Period of validity

There is  no fixed limitation of period of validity, and it is based on the contract.

Except  construction and installation, period of validity should not exceed 180 days.  If the period of project exceeds the validity of outbound certificate, the  old certificate will be expired and then a new one shall be applied.  

Extension

Taxpayers can apply for extension of inspection  to the tax authority either its organization or the business activities  locate.

Normally  the old certificate will be de-registered and then a new one shall be applied  for.

Information transfer

Either  between the state tax authorities of the organization location and the business  location, or between state tax authorities and local tax authorities in the  same place, the information is rapidly transferred through internal  information systems.

Taxpayers  shall apply for Inspection to the business location tax authority, with  outbound business certificate, related contract and description of the  situation.

Deadline of applying for inspection

When the  first-time taxpayer is dealing with tax issues in the business location.

Within 30  days after the “outbound business certificate” is issued.

Information feedback after the business is done

Fill in  “Feedback of tax issues in the business location”

Fill in  “Tax Return for outbound business activities”

De-register

No need  to de-register in the tax authority where enterprise locates.

Taxpayer  must de-register in the tax authority where enterprise locates.

We believe, with the new regulation, on the one hand, taxpayers may feel more flexible and free, reducing the trouble of travelling between two locations. On the other hand, tax authorities of both locations may strengthen the control of tax issues, based on the automatic tax information exchange and analysis in the information system. We recommend,while enjoying the convenience, taxpayers set up more effective internal control on taxation of trans-regional business.

If you need further information or support:

Please do not hesitate toget in touch with us via marketing@ecovis.cn .


If you have further interest in of the complete (9 newsletter issue, you can download the whole newsletter bulletin via the “PDF icon” at the right hand top/ bottom side(PDF