There are multiple ways for repatriating profits out of China. In this publication the most well-known and commonly applied repatriation method of dividend payments are discussed in detail. In this publication the preconditions that organizations must meet to be able to effect dividend payments are discussed, followed by the calculation of net dividends as well as the applicable payment procedure that has to be complied with.

Depending on the bilateral Double Taxation Agreements between China and the contracting country or non-state tax jurisdictions where the foreign parent company is located, generating income in China has tax implications which might affect the overall tax burden of both the China-based subsidiary company and the foreign parent company. Tax liabilities related to Corporate Income Tax and Withholding Tax are discussed in detail, as well as the requirements organizations have to meet to become eligible to reduce these liabilities.

In many of the Double Taxation Agreements preferential withholding tax rates for income out of dividend sourced from China are only applicable when the recipient holds a beneficial ownership status over the dividend income. The concept of beneficial ownership is discussed in detail as well as the requirements that must be met to achieve this status.

In recent years, the policy and procedure for the application of DTA benefits has been updated multiple times, each time further streamlining the reporting and approval requirements. This publication includes the latest regulations on application for bilateral tax treaty benefits which enter into effect per 1 January 2020.

To support well informed business decisions the content of this publication is supported by detailed calculation examples, illustrations of process flows and checklists.