If a non-resident enterprise obtains dividends, bonuses and other equity investment income from China, the withholding agent shall submit relevant materials to the competent tax authorities for tax withholding registration according to the provisions of No.3 [2009] of the State Administration of Taxation.

2. Apply for preferential tax rates stipulated in tax treaties or double taxation avoidance arrangements.

If a non-resident enterprise obtains dividends, bonuses and other equity investment income from China, it shall pay enterprise income tax at the rate of 10%. If the tax treaty or double taxation avoidance arrangement signed between the country or region where the shareholders are located and China stipulates a more preferential tax rate, they may apply for the agreed preferential tax rate. For example, Hong Kong enterprises can enjoy a preferential tax rate of 5% if they directly own at least 25% of the shares of domestic investment enterprises.

In order to enjoy the preferential tax rate, foreign investors need to submit relevant information to the tax authorities for application, and can enjoy it only after examination and confirmation. See How Non-resident Enterprises Apply for Preferential Tax Agreement for specific procedures.

3. Apply for tax payment certificate.

According to Huifa [2008] No.64 document, dividends, bonuses, profits and other equity investment income are paid overseas, and the equivalent amount of a single payment is less than 30,000 US dollars, and foreign exchange can be paid directly without tax payment certificate.

Enterprises need to pay attention to the fact that exemption from issuing tax certificates does not mean tax exemption. If the invested enterprise fails to withhold and pay taxes as required, there will be tax risks.

If the income from paying dividends, bonuses, profits and other equity investments abroad is equivalent to more than US$ 30,000 (excluding the equivalent of US$ 30,000), relevant materials shall be submitted in accordance with the provisions of Guo Shui Fa [2008] 122, and the tax payment certificate shall be applied to the national tax first and then to the local tax.

Related links: Notice on Printing and Distributing the Administrative Measures for Issuing Tax Certificates for Foreign Payment of Service Trade and Other Projects