State Administration of Taxation, Several Specific Measures on Further Strengthening the Administration of the Levy and Collection of Taxes

- taxable income of enterprises and verification of their non-monetary income: analysis and investigation shall be conducted on taxpayers whose sales income filed for value-added tax and the business income filed for income tax for the same tax period are markedly discrepant. In case of major problems, taxes may be imposed retroactively for previous years (Article 7);

- tax on equity transactions: identify and guard against tax avoidance by non-tax-resident enterprises through abuse of their organisational form, place of tax avoidance and tax treaty (Article 10);

- enterprise listed overseas deemed as tax-resident enterprises: promote the recognition and registration as tax-resident enterprises of qualified overseas-incorporated enterprises in which the Chinese party has a controlling share, and guard against tax evasion by using overseas-incorporated enterprises (Article 11);

- anti-tax evasion:

(i) rigorously investigate affiliated transactions that fail to embody the arm's length principle in which a foreign party uses its domestic subsidiary to obtain financing from China by securing the loan against the rights to returns from highways, using the loan for investment and obtaining the rights to returns from highways;

(ii) for pharmaceutical manufacturing, focus on determining the value of intangible assets;

(iii) for the chain hotel industry, focus on examining whether affiliated transactions in which a chain hotel group of four stars or above pays its overseas parent company service fees and management fees are in compliance with the arm's length principle;

(iv) strengthen monitoring of cross-border connected transactions: focus on monitoring enterprises in China that undertake limited functions and risks such as sole production, distribution or contracted research and development, and guard against the transfer of operating losses of overseas enterprises resulting from the financial crisis by multinational corporations to domestic affiliated enterprises (Article 12);

- tax administration of the construction and installation, and real property industries: focus on the review of real property development costs; launch the pilot work on determination of price for tax assessment of second-hand housing transactions using real property tax assessment technology and impose tax according to the price determined where the transaction price filed by the taxpayer is markedly low without legitimate reasons (Article 14); and

- tax administration of labour services provided by non-tax-resident enterprises: focus on investigation of the placement of workers to China by non-tax-resident enterprises to provide administration, design, certification and consultancy services, and correct determination of tax payment obligations of non-tax-resident enterprises in accordance with tax laws and tax treaties of China (Article 17).

- tax authorities shall also investigate key construction projects contracted by non-tax-resident enterprises; distribution of dividends and profits, and payment of interest by domestic enterprises to non-tax-resident enterprises; and transfer of equity by non-tax-resident enterprises. If the tax authority uncovers any problem, it shall seek unpaid taxes in accordance with the law in a timely manner (Article 18).