Recently, it is normal to have different opinions about the Administrative Measures on Due Diligence of Tax-related Information in Non-resident Financial Accounts (AnnouncementNo. 14, referred to as the Administrative Measures) circulating on the Internet. However, the title of a report surprised me. The topic is "China tax residents whose account balance exceeds $654.38+00,000, please note that your information will be exchanged with domestic tax authorities". I'm sure this topic is wrong. The following is my understanding of three major issues of due diligence on tax-related information of non-resident financial accounts. Welcome to reading.

Basic concepts of due diligence on tax-related information in financial accounts

The Administrative Measures jointly issued by State Taxation Administration of The People's Republic of China, the Ministry of Finance, the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission clearly stipulate that financial institutions should follow the principles of good faith, prudence and diligence, understand the tax resident status of account holders or related controllers for different types of accounts, identify non-resident financial accounts, and collect and submit account-related information in accordance with the provisions of the Administrative Measures.

First look at the so-called financial institutions and financial accounts.

The financial institutions mentioned here include deposit institutions, custody institutions, investment institutions, specific insurance institutions and their branches.

Financial accounts refer to deposit accounts, custody accounts and other accounts. Financial accounts include stock accounts and new accounts. Among them, stock accounts refer to personal accounts and institutional accounts that meet one of the following conditions:

(1) Financial accounts held by financial institutions and individuals or institutions as of June 30, 20 17;

(2) Financial accounts opened after July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/July/

1. The account holder has opened the account mentioned in item 1 of this paragraph in the same financial institution;

2. When determining the total balance of accounts, the above-mentioned financial institutions regard the account mentioned in Item 2 of this paragraph and the account mentioned in Item 1 of this paragraph as the same account;

3. The financial institution has identified the anti-money laundering customer of the account mentioned in item 1 of this paragraph;

4. When opening an account, the account holder does not need to provide other information except the information required by these Measures.

Secondly, understand the due diligence of stock accounts.

The due diligence mentioned in the Administrative Measures is not an investigation in a general sense, but refers to the fact that financial institutions know the identity of tax residents of account holders or related controllers, identify non-resident financial accounts, and collect and record relevant account information in accordance with prescribed procedures. In fact, financial institutions have been carrying out similar customer identification work for anti-money laundering purposes at the request of relevant authorities.

According to the Administrative Measures, financial institutions should complete due diligence on stock accounts within the following time limits:

(1) Personal account stock (including low-net-worth accounts and high-net-worth accounts)

1. Low-net-worth account refers to the total account balance as of June 30, 20 17 (the total account balance refers to the sum of all financial account balances or assets held by the account holder in the same financial institution and its affiliated institutions, the same below), and does not exceed the equivalent of one million US dollars (hereinafter referred to as? A million dollars? , the same below) account.

Financial institutions should complete due diligence on existing personal low-net-worth accounts before 20 18 12 3 1. In addition, for the personal low net worth account in stock, if the total balance of the account exceeds one million dollars at the end of any calendar year after June 30, 20 17, the financial institution shall complete the due diligence on the account according to the prescribed procedures before February 3 1 of the following year.

2. A high-net-worth account refers to an account with a total balance of more than one million dollars as of June 30, 20 17.

Financial institutions shall complete the due diligence procedures for existing personal high-net-worth accounts before 20 17 12 3 1.

(2) Stock institution account

1. As of June 30th, 20 17, financial institutions should complete due diligence on the total balance of existing institutional accounts exceeding USD 250,000 before 20 18 12 3 1. 2. As of 2065438+June 30, 2007, financial institutions do not need to conduct due diligence on the total balance of existing institutional accounts not exceeding $250,000. However, if the total balance of the account at the end of any calendar year thereafter exceeds USD 250,000, the financial institution shall complete the due diligence on the account according to the regulations before 65438+February 3 1 of the following year.

2. The relevant due diligence of non-residents or negative non-financial institutions with non-resident controllers is not detailed here.

Finally, understand the object of account information submission and exchange.

After completing due diligence, a financial institution shall open an account with the institution and its domestic branches? Non-resident financial account information shall be summarized and reported to State Taxation Administration of The People's Republic of China.

As for the identification standard of tax resident status, for individuals, residence (residence) standard and residence time standard are usually adopted at the same time, and taxpayers can become tax residents of the country (region) as long as they meet one of them; For enterprises, the standard of place of registration and the standard of location of management institution are usually adopted.

The term "non-residents" as mentioned in the Administrative Measures refers to individuals and enterprises (including other organizations) other than tax residents in China, but does not include government agencies, international organizations, central banks, financial institutions or companies listed and traded in the securities market and their subsidiaries. The aforementioned securities market refers to the securities market recognized and supervised by the local government.

China tax residents refer to resident enterprises or individual residents as stipulated in China tax law.

Non-resident financial accounts refer to financial accounts opened or maintained by financial institutions in China and held by non-residents or negative non-financial institutions with non-resident controllers.

Accordingly, all provisions in the Administrative Measures on due diligence of tax-related information of non-resident financial accounts are aimed at due diligence of newly opened financial accounts or stock accounts, and the collection and submission of tax-related information of relevant accounts to tax authorities? Non-resident financial accounts

To sum up, regarding the information exchange of financial accounts of China tax residents in other countries (regions), according to the relevant rules, countries (regions) that have promised to implement the automatic exchange standard of tax-related information of financial accounts will exchange tax-related information of financial accounts with each other. As for another country (region), the relevant identification standards and procedures for tax non-residents are different, which does not belong to the scope of China's "Administrative Measures for Due Diligence of Tax-related Information on Non-residents' Financial Accounts", and it is even more impossible to draw a unified standard and conclusion that the account balance exceeds US dollars.

If the account holder is an individual tax resident in China, financial institutions will not collect and submit relevant account information, nor will they exchange with other countries (regions). If the account holder is both a tax resident of China and a tax resident of other countries (regions), his account information in China will be exchanged with the tax authorities of the corresponding tax resident countries (regions), and his account information abroad will be exchanged with State Taxation Administration of The People's Republic of China, People's Republic of China (PRC).

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