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Mar 2013, Issue 7

Withholding Income Tax treatment of Non-TREs’ passive income under the B2V Pilot Programme

Under the current Business Tax ("BT") to Value Added Tax ("VAT") Transformation Pilot Programme ("B2V Pilot Programme") in China, there is a question on whether passive income derived by Non-Tax Resident Enterprises ("Non-TREs") from the provision of Pilot Services should be subject to Withholding Income Tax ("WIT") net or inclusive of VAT.

On 19 Feb 2013, the State Administration of Taxation ("SAT") issued a notice (SAT Public Notice [2013] No. 9, hereafter referred to as "Public Notice 9") addressing this question. This News Flash looks at this new Public Notice 9 and illustrates the financial impacts to cross-border payments under the B2V Pilot Programme.

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Peter Ng
China and Hong Kong Tax Leader
Tel: +[86] (21) 2323 1828 Email
Charles Lee
China South Tax Leader
Tel: +[86] (755) 8261 8899 Email