On October 21st, 2019，the State Administration of Taxation (SAT) of the PRC released the updated Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treat under Tax Agreement. The new regulation will be implemented from January 1st, 2020, while the previous edition will be abolished at the same time.
Let’s see the highlights:
1. Identification
“Non-resident taxpayer” mentioned here refers to the taxpayer who shall be the tax resident of the contracting party in accordance with the residents’ provisions of the Tax Agreement.
“Agreement treatment” mentioned here refers to the entity income tax and individual income tax obligations that in accordance with the domestic tax law may be reduced or exempted in line with the Tax Agreement.
2. Main procedure
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.
If a non-resident taxpayer finds that he should not enjoy the agreed treatment and had paid less or no taxes, he shall voluntarily file a tax supplement with the competent tax authority.
If a non-resident taxpayer paid more tax than agreed treatment, he may, within the time limit prescribed by the Tax Collection and Administration Law of PRC, request the refund of the overpaid tax to the competent tax authority, and submit the relevant information stipulated in the Measures.
3. The above-mentioned relevant information includes:
(1) The identification of tax residents of the current year or in the previous year, issued by the tax authorities of the contracting parties;
(2) Contracts, agreements, resolutions of the board of directors or shareholders’ meetings, payment certificates, etc. relating to the acquisition of relevant revenue;
(3) Where the non-resident taxpayer enjoys the agreed treatment relating to dividends, interest and royalties, relevant information certifying the status of “beneficiary”;
(4) Other information that non-resident taxpayers consider to be able to prove that they are eligible for the agreed treatment.
4. Simplification of Paperwork
The new regulation has reduced paperwork for non-resident taxpayers, who only have to file one statement.
However, if the original information required by the competent tax authority is in foreign languages, a Chinese translation shall be attached and the non-resident taxpayer shall be responsible for the accuracy and completeness of the translation.
Non-resident taxpayers and withholding agents may provide copies of information to the competent tax authorities, but they shall mark the original storage places on the copies and stamp the seal or seal of the person responsible for the report. If the competent tax authority requests the original to be examined, they shall produce the original.
 5. Legal liability
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.
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