A report on statistics compiled by China’s State Administration of Taxation (SAT) indicates that the tax paid in 2012 by non-resident enterprises in China showed a slight increase, following a sharper rise in the previous year, and amounted to more than RMB 109 billion. Within this total, the amount of corporate income tax paid by non-resident enterprises amounted to RMB 91.33 billion.
The report indicates that the increased tax take is due to continued strengthening of the administrative procedures in respect of tax filing and payment, collection of withholding tax at source, assessment and final payment of tax. This has enabled growth in tax collection to continue despite the weak demand in the global economy.
Most of the tax from foreign enterprises is collected by withholding tax at source, More than RMB 80 billion or 88.5% of the total non-resident corporate income tax was collected by this method in 2012. The most important source of tax revenue was the corporate income tax levied on dividends and bonuses which accounted for RMB 44.4 billion, or 48.6% of the total income tax on non-resident enterprises. Income tax from royalties totaled RMB 19.7 billion, an increase from the previous year reflecting the continued introduction of advance technology from abroad. Income tax on interest contributed RMB 4.93 billion. Corporate income tax on property transfers amounted to RMB 6.85 billion. The tax collected from interest is expected to increase the most in the future as a result of the anticipated Renminbi appreciation and tightened domestic credit.
The collection of foreign enterprise income tax is concentrated in the economically developed areas of China. The report noted that the non-resident corporate income tax collection exceeded RMB 10 billion in 2012 in three locations – the cities of Beijing and Shanghai and Jiangsu province. The highest ten provinces or cities in terms of non-resident tax collection contributed more than RMB 78 billion, or 85.4% of the total for the whole country.