Core Viewpoint - The article discusses the implementation of tax credit policies for foreign investors reinvesting distributed profits in China, emphasizing the deferred tax policy and the calculation of tax credit amounts based on specific conditions [2][4]. Group 1: Deferred Tax Policy - The deferred tax policy for foreign investors remains effective, allowing them to reinvest profits distributed from Chinese resident enterprises without incurring withholding income tax [2]. - Foreign investors can choose to calculate the tax credit amount based on either 10% of the reinvestment amount or a lower dividend tax rate specified in applicable tax treaties [2][4]. Group 2: Tax Credit Calculation - In the first scenario, if a foreign investor meets the conditions, they can select between a 10% or a lower tax treaty rate for calculating the tax credit [4]. - In the second scenario, if a foreign investor has multiple eligible reinvestments, the tax credit amounts must be aggregated separately for each profit-distributing enterprise [5]. Group 3: Currency Conversion - When reinvesting in currencies other than RMB, the reinvestment amount should be converted to RMB using the middle exchange rate on the actual payment date to calculate the deferred tax and tax credit [10]. Group 4: Adjusting Tax Credit Amounts - Tax authorities may adjust the tax credit amount if they determine that a foreign investor does not qualify for the tax credit policy, such as if the investment is withdrawn before five years [11]. Group 5: Tax Payment Procedures - Foreign investors must differentiate whether they meet the tax credit policy conditions when recovering investments and calculate the tax and penalties accordingly [12][16]. Group 6: Investment Recovery Order - The order of recovering investments is established as follows: investments that have enjoyed tax credits first, followed by those that meet but have not enjoyed the policy, then those under deferred tax policy but not qualifying for tax credits, and finally other investments [16].

Core Points - The announcement by the Ministry of Finance, State Administration of Taxation, and Ministry of Commerce regarding the tax credit policy for foreign investors reinvesting distributed profits remains effective, allowing for deferred tax payment on eligible reinvestments [2][3]. Group 1: Tax Credit Policy - The deferred tax policy allows foreign investors to reinvest profits distributed from Chinese resident enterprises into non-restricted foreign investment projects without incurring withholding income tax [2]. - When calculating the tax credit amount for reinvestment, foreign investors can choose between a 10% rate or a lower rate specified in applicable tax treaties [3][5]. - An example illustrates that if a foreign company receives a profit of 10 million yuan and reinvests it, it can choose to apply either a 10% or a 5% tax rate for calculating the tax credit [4][5]. Group 2: Tax Credit Adjustment - If a foreign investor does not meet the conditions for enjoying the tax credit policy, the tax credit amount must be adjusted accordingly [8]. - An example shows that if a foreign investor recovers part of their investment before five years, they must adjust their tax credit amount and pay the corresponding deferred tax [8][13]. - The order of recovering investments is specified, prioritizing those that have enjoyed the tax credit policy [15][22]. Group 3: Currency and Tax Reporting - For reinvestments made in currencies other than RMB, the amount must be converted to RMB using the exchange rate on the payment date to calculate the deferred tax and tax credit [7]. - Foreign investors must submit specific tax forms when recovering investments, detailing the tax credit and any taxes owed [9][14].

Core Viewpoint - The article discusses the new tax credit policy for foreign investors reinvesting distributed profits in China, effective from January 1, 2025, to December 31, 2028, allowing a 10% tax credit on the reinvested amount [2][3]. Summary by Sections Tax Credit Policy Details - Foreign investors can use profits distributed by Chinese resident enterprises for direct investment in China, eligible for a 10% tax credit on the investment amount, with any unused credits allowed to be carried forward [2][3]. - The policy applies to profits classified as dividends or similar equity investments from Chinese resident enterprises [3]. Eligibility Criteria - The profits must be actual distributions from Chinese resident enterprises and used for direct investments such as capital increases, new establishments, or equity acquisitions, excluding certain stock purchases [3][4]. - Investments must be in industries listed in the "Encouraged Foreign Investment Industry Catalog" and held for at least 5 years [4]. Application Process - Eligible foreign investors must submit their applications through the invested enterprise to the local commerce authority, providing necessary documentation and information [8]. - Upon approval, the foreign investor must fill out specific forms to claim the tax credit when filing taxes [10]. Handling of Withdrawals - If a foreign investor withdraws their investment after 5 years, they must report and pay any deferred taxes within 7 days [9]. - If the investment is withdrawn before 5 years, the investor must reduce their tax credit eligibility and pay any excess credits used [11]. Transitional Provisions - Investments made between January 1, 2025, and the announcement date can apply for retroactive tax credits, but investments prior to January 1, 2025, are not eligible [8].

Core Viewpoint - The new tax credit policy for foreign investors allows them to enjoy a 10% tax credit on reinvested profits from January 1, 2025, to December 31, 2028, while maintaining the effectiveness of the deferred tax policy [8][17]. Summary by Relevant Sections Tax Credit Policy - Foreign investors can receive a tax credit of 10% on the amount of reinvested profits during the specified period, with any unused credit eligible for carryover to future years [8][17]. - The tax credit applies to profits distributed by Chinese resident enterprises, which are reinvested in eligible domestic investments [5][12]. Investment Conditions - The profits must be derived from equity investments such as dividends and retained earnings from Chinese resident enterprises [5]. - The reinvestment must be held for a minimum of 5 years (60 months) [6][12]. - The investment must be in industries listed in the "Encouraged Foreign Investment Industry Catalog" [5][12]. Application Process - Foreign investors must submit relevant information through the invested enterprise to the local commerce department for verification [19][20]. - Upon approval, the invested enterprise will provide a "Profit Reinvestment Situation Table" to the foreign investor [19][20]. Tax Credit Adjustment - If a foreign investor withdraws part of the reinvested capital before the 5-year holding period, the tax credit amount will be adjusted accordingly [9][12]. - For example, if a foreign investor reinvests 10 million yuan and later withdraws 7 million yuan, the tax credit will be reduced by 700,000 yuan [9]. Documentation Requirements - To claim the tax credit, foreign investors must submit several documents, including the "China Tax Withholding Report" and the "Foreign Investor Reinvestment Tax Credit Information Report" [21][22]. - The invested enterprise must also report the necessary information to the tax authorities [22].

Core Viewpoint - The announcement by the Ministry of Finance, State Taxation Administration, and Ministry of Commerce introduces a tax credit policy for foreign investors who reinvest profits distributed by Chinese resident enterprises from January 1, 2025, to December 31, 2028, allowing a credit of 10% of the investment amount or applicable treaty tax rates against corporate income tax on subsequent dividends, interest, and royalties received from the profit distribution enterprise [1]. Group 1 - The policy aims to encourage foreign investors to reinvest in China, particularly in Guangdong, by providing tax incentives [3]. - The Guangdong Provincial Development and Reform Commission highlighted the province's stable economic performance and the diverse development opportunities available for foreign enterprises [5]. - The Guangdong Provincial Department of Commerce provided a detailed interpretation of the core content of the tax credit policy, focusing on aspects such as profit nature, investment type, industry scope, investment duration, and payment methods [5]. Group 2 - The State Taxation Administration of Guangdong Province explained the key points of the tax credit policy through practical examples and detailed the application process [7]. - KPMG China compared the new policy with the "withholding income tax deferral" and "tax credit" policies, emphasizing the importance of internal communication and attention to policy execution details for maximizing benefits [9]. - The event attracted nearly a hundred participants, with representatives expressing a deeper understanding of how to utilize the tax incentives effectively and reduce potential tax compliance risks [10].

Core Viewpoint - The article discusses the effectiveness of the deferred tax policy for corporate income tax and clarifies that the relevant documents continue to apply, ensuring that foreign investors can still enjoy the deferred tax policy when reinvesting [2][21]. Summary by Sections Deferred Tax Policy - The deferred tax policy allows foreign investors to postpone withholding income tax on profits distributed from Chinese resident enterprises when reinvested in non-restricted foreign investment projects [4][21]. Tax Credit Calculation for Reinvestment - When foreign investors reinvest, the tax credit amount is calculated based on two scenarios: 1. For compliant enterprises, the credit can be calculated at either 10% or a lower rate specified in applicable tax treaties [6][5]. 2. If multiple compliant domestic investments exist, the tax credit must be aggregated by each profit-distributing enterprise [9][8]. Currency Conversion for Reinvestment - If reinvestment is made in currencies other than RMB, the amount should be converted to RMB using the middle exchange rate on the actual payment date to calculate the deferred tax and tax credit [10][11]. Adjustment of Tax Credit Amount - Tax authorities may adjust the tax credit amount if it is found that the foreign investor does not qualify for the tax credit policy, such as when the reinvestment is held for less than five years [12][13]. Understanding "Tax Amount Eligible for Credit" - The tax amount eligible for credit must meet specific conditions, including the type of income and the timing of income acquisition relative to reinvestment [14][15]. Holding Period for Reinvestment - The holding period for reinvestment begins from the month indicated in the "Profit Reinvestment Situation Table" issued by the business authority and ends when the investment is recovered or legal changes are completed [16][17]. Tax Payment Procedures for Recovered Investments - When recovering investments that enjoyed the tax credit policy, foreign investors must distinguish whether they meet the conditions for the tax credit and calculate the tax and penalties accordingly [21][27]. Order of Investment Recovery - The order of recovering investments is determined by the type of investment, prioritizing those that have enjoyed the tax credit policy [30][31]. Tax Payment for Partial Disposal of Investments - If a foreign investor recovers investments before five years, they must pay deferred taxes and proportionally reduce the tax credit amount [36][35]. Handling of Remaining Tax Credit Balances - Tax credits that remain after December 31, 2028, can still be utilized until the balance is zero [48].

Core Viewpoint - The article discusses the new tax credit policy for foreign investors in China, aimed at promoting reinvestment of profits earned by foreign enterprises in the country. This policy will be effective from January 1, 2025, to December 31, 2028, and is designed to enhance the business environment and attract foreign investment [1]. Summary by Sections Policy Overview - The policy allows foreign investors to directly invest their distributed profits in China, with tax credits applicable to certain types of income such as dividends and royalties [3][4]. - The applicable tax rate for dividends and similar income under tax treaties with foreign governments is set at below 10% [3]. Eligibility Criteria - Foreign investors must receive profits from Chinese resident enterprises as retained earnings, which can be reinvested [4]. - Direct investments must include capital increases, new establishments, or equity acquisitions, excluding certain stock purchases [4]. - Investments must be in industries listed in the "Encouraged Foreign Investment Industry Catalog" [5]. - Foreign investors are required to hold their investments for at least 5 years (60 months) to qualify for the tax credit [5]. Investment Recovery and Tax Obligations - After 5 years, if foreign investors withdraw their investments, they must report and pay any deferred taxes on the distributed profits [5]. - If investments are withdrawn before the 5-year period, the tax credits will be adjusted, and any excess credits must be repaid [5]. - The policy allows for tax credits to be carried forward until the balance is exhausted, even after the policy's expiration [6]. Application and Compliance - Foreign investors must provide necessary documentation to the profit-distributing enterprises to benefit from the tax credit [6]. - The profit-distributing enterprises can temporarily refrain from withholding taxes on reinvested profits based on the provided documentation [6]. - Investments made before the policy announcement can apply for retroactive tax credits, but investments prior to January 1, 2025, are not eligible [6].

Group 1 - The article provides a guide on how to check whether a client's invoice has been selected for tax deduction through the electronic tax bureau or its app [1][9] - The steps to query invoices include logging into the electronic tax bureau, navigating to the invoice query section, and selecting the appropriate query conditions [1][3] - Users can view detailed information about the invoice status by clicking on the "details" link, which shows the current label information of the selected invoice [3][5] Group 2 - The article emphasizes the importance of understanding tax benefits and ensuring compliance to effectively utilize available tax incentives [14][15] - It discusses the differences in tax treatment for domestic and foreign R&D expenses, highlighting the calculation of deductible amounts for both types [14][17] - The article outlines the process for foreign investors to report reinvestment information and the necessary documentation required for tax credit eligibility [17][20]

Core Points - The announcement from the State Taxation Administration of China clarifies the tax credit policy for foreign investors using distributed profits for direct investment [1] - The policy allows foreign investors to offset 10% of their taxable income for investments made between January 1, 2025, and December 31, 2028, with any unused credits eligible for carryover [1] - The tax credit policy does not affect the existing deferred tax policy for foreign investors [1] Summary by Sections - **Tax Credit Policy**: Foreign investors can use profits distributed by Chinese resident enterprises for direct investment, allowing a 10% tax credit on the investment amount [1] - **Implementation Timeline**: The policy will be effective from January 1, 2025, to December 31, 2028 [1] - **Conditions for Tax Credit**: The policy includes provisions for foreign investors to use profits for capital contributions or increases in paid-in capital, and they can choose to calculate the tax credit based on either the 10% reinvestment amount or a lower dividend tax rate as per applicable tax treaties [1]

Core Viewpoint - The announcement by the State Taxation Administration outlines the tax credit policy for foreign investors reinvesting distributed profits directly into domestic enterprises, aiming to encourage foreign investment in China [2][3]. Summary by Sections Section 1: Policy Implementation - Foreign investors using profits to replenish registered capital or increase paid-in capital in domestic enterprises qualify as "new or increased paid-in capital" [3]. - The reinvestment period begins in the month specified in the "Profit Reinvestment Situation Table" issued by the competent commerce department [3]. Section 2: Tax Credit Calculation - Foreign investors can choose to calculate the tax credit based on either 10% of the reinvestment amount or a lower dividend tax rate as per applicable tax treaties [4]. - If multiple domestic enterprises distribute profits for reinvestment, the tax credit is calculated separately for each enterprise [4]. Section 3: Currency and Reporting - Reinvestments made in currencies other than RMB must be converted to RMB at the exchange rate on the payment date for tax credit calculations [4]. - Foreign investors must submit the "Overseas Investor Reinvestment Tax Credit Information Report" along with the "Profit Reinvestment Situation Table" to the profit distribution enterprise [4][5]. Section 4: Documentation and Compliance - When recovering investments and applying for tax credits, foreign investors must provide specific documentation to the tax authorities [5]. - The tax authorities are required to maintain a record of foreign investors benefiting from the tax credit policy and track compliance [6]. Section 5: Investment Recovery Order - The order of recovering investments involves first disposing of investments that have already enjoyed tax credits, followed by those that meet the conditions but have not yet benefited from the credits [7]. Section 6: Delegation of Authority - Foreign investors and profit distribution enterprises may appoint agents to handle matters related to the announcement, provided written authorization is submitted to the tax authorities [8]. Section 7: Effective Date - The announcement will take effect from January 1, 2025 [9].