View this page in: 简体中文版 May 2009, Issue 14Unveiling of detailed rules on China tax resident status for Chinese-capital / controlled foreign companies The PRC's new Corporate Income Tax ("CIT") Law which took effect from 1 January 2008 has introduced the concept of Tax Resident Enterprise ("TRE"). Enterprises established in accordance with the laws in China or in accordance with the laws of foreign countries (regions) but with its effective management located in China shall be regarded as Chinese TREs. Chinese TREs would be subject to CIT on their worldwide income.
As the CIT Law and its Detailed Implementation Regulations ("DIR") only provided a general guideline for the concept of TRE and effective management, foreign companies with certain management and control functions performed in China, including those that are owned / controlled by Chinese investors, have been eagerly awaiting for the detailed rules on the assessment of Chinese TRE since the issuance of the CIT Law and its DIR.
In April of 2009, the State Administration of Taxation ("SAT") finally released Circular Guoshuifa [2009] No.82 ("Circular 82") clarifying the TRE determination criteria, CIT treatments, application procedures, etc. for Chinese-capital / controlled foreign companies ("CCCFC"). Circular 82 took effect retrospectively from 1 January 2008. In this issue of our News Flash, we would highlight the salient points of Circular 82 and share our insights, observation and recommendations.
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