Income tax exemption expanded for overseas investors

2018/10/11

China said on September 29, 2018 that it has expanded a preferential policy to temporarily exempt certain profits obtained by overseas investors from withholding income tax in order to encourage inbound investment.

China has previously deferr withholding income tax on profits that were distributed to overseas investors by resident enterprises in the country and directly reinvested in encouraged investment projects.ed

Now the scope of the exemption has been expanded to all foreign investment projects other than prohibited ones, according to a policy document released by the Ministry of Finance and three other government departments.

The profits distributed to overseas investors refer to equity investment returns, including dividends and corporate bonuses, according to the document. The reinvestment of the profits does not include purchases of listed companies’ shares, except qualified strategic investment.

The exemption is effective from January 1, 2018, meaning taxes already paid this year will be refunded.

Source: Chinadaily