Recently, Chinese tax collection offices have become increasingly strict with regard to the shipping-related income of foreign companies in China. Chinese companies which are withholding agents must withhold corporate income tax and business tax that is payable by foreign companies. This has resulted in many difficulties for foreign companies accustomed to a less stringent tax collection policy.
Existing law
Corporate income tax and business tax on the shipping-related income of foreign companies in China is not new. The Ministry of Finance and the State Administration of Taxation promulgated the Taxation of Shipping-related Income of Foreign Companies Measures in 1996.
Partner
Dacheng Law Offices
According to article 2 of the Measures, when foreign companies carry passengers, cargo or mail overseas by ship from Chinese ports they must pay business tax and corporate income tax on their transport revenue.
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Chen Weidong is a partner and Steven Zhou is a lawyer at Dacheng Law Offices
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