State Administration of Taxation, Tax Administration Issues Relevant to Resident Representative Offices of Foreign Enterprises Circular

Issued: March 12 2003
Effective: July 1 2003

Main contents: The Circular clarifies some issues arising from the implementation of the State Administration of Taxation, Strengthening the Administration and Payment of Taxes of Resident Representative Offices of Foreign Enterprises Relevant Issues Circular (the 1996 Circular). It concerns (1) the tax registration and filing of tax returns of representatives offices that are not taxed or are exempted from tax, (2) methods for levy of tax on different types of representative offices, (3) tax exemption of foreign governments, non-profit organizations and others, and (4) administration and spot checking of representative offices. Section Two(2) of the Circular stipulates that revenue of representative offices engaged in agency or trading services (Items One, Four and Five of the first paragraph of Article 1 of the 1996 Circular) should be converted from their expenses as long as the representative offices do not directly conclude a contract with the service receiver and service charges are collected by the parent company. Representative offices engaged in commercial, legal, tax, audit and accounting services (Item Two of the first paragraph of Article 1 of the 1996 Circular) shall keep complete accounts books and correctly calculate their revenue and taxable income.
Related legislation: State Administration of Taxation, Strengthening the Administration and Payment of Taxes of Resident Representative Offices of Foreign Enterprises Relevant Issues Circular, Oct 11 1996, CLP 1997 No.1 p7 and PRC Administration of Tax Collection Law (Revised in April 2001), Apr 28 2001, CLP 2001 No.5 p12 & CLP 1995 No.3 p12