Core Viewpoint - The article discusses the tax policies encouraging foreign investment in China, specifically focusing on the exemption of withholding income tax for foreign investors reinvesting distributed profits directly into domestic enterprises [2][5]. Group 1: Policy Content - Foreign investors can reinvest profits distributed from Chinese resident enterprises without incurring withholding income tax since January 1, 2018, provided they meet specific conditions [5]. - The scope of direct investment includes non-restricted projects and fields, and can involve actions such as capital increases, new establishments, and equity acquisitions, excluding certain stock purchases [5][6]. - Profits eligible for reinvestment must be actual distributions from retained earnings, such as dividends [5]. Group 2: Applicable Conditions - Non-resident taxpayers are defined as those who qualify as tax residents under tax treaties [3]. - Non-resident taxpayers can self-assess and claim treaty benefits during tax filings, retaining necessary documentation for verification by tax authorities [3][7]. - Required documentation includes proof of tax residency and any agreements or contracts related to the income [7]. Group 3: Policy Basis - The policy is based on the announcement by the State Administration of Taxation regarding the management of treaty benefits for non-resident taxpayers [4][9].

Core Viewpoint - The article discusses the policy that allows foreign investors to reinvest profits distributed from Chinese resident enterprises without incurring withholding income tax, effective from January 1, 2018 [3]. Policy Content - The policy applies to foreign investors who meet specific conditions for direct investment in China using distributed profits [3][4]. Applicable Conditions - Condition 1: The direct investment must be in non-prohibited projects and sectors for foreign investment [5]. - Condition 2: The direct investment includes actions such as capital increase, new establishment, and equity acquisition, but excludes certain types of acquisitions like those of listed companies, unless they meet specific strategic investment criteria [6][7]. - Condition 3: The profits used for direct investment must be actual distributions of retained earnings, such as dividends [8]. - Condition 4: The profits must be paid in cash directly from the distributing enterprise's account to the investment enterprise or equity transfer party, without prior circulation in other accounts [9]. - Condition 5: "Foreign investors" are defined as non-resident enterprises as per the Corporate Income Tax Law, while "Chinese resident enterprises" are those legally established within China [10].