Corporate Tax Services

Common Issues

Many multinational company tax directors and manages conveys that managing the tax work in China is an art.

• The laws are simple, but there are so many "circulars" giving interpretations to the law.
• There are many tax incentives available, but the tax incentives are not automatic, you need to ask and negotiate.
• You need to deal with state and local tax bureaus on different type of taxes.
• The format of annual corporate income tax returns are adjusted frequently, which create issues for financial staffs to keep up with the changes.
• Transfer pricing work in China is difficult, especially due to the lack of public databases providing the pricing information and financial data in the industry.
• Tax related to foreign service provides are often overpaid. The in-charge tax bureaus often have their own internal guidance/interpretations over on-shore/offshore split percentage, "Permanent Establishment", deemed profit rate, etc.
• There is no standard process to streamline the process in adjust home country GAAP based reports to PRC tax GAAP. Many multinational companies have to maintaining two sets of accounting systems, which may potentially lead to compliance issues and additional admin costs.
• The overall corporate tax regime is in the process of change. (EIT, VAT)

Our Services

Overview

Hendersen's corporate tax practice is armed with tax professionals and ex-tax authority staff from China and throughout the region that can advise you on China and international corporate, indirect and personal taxes. Our advice directly focuses on your business operations and proactively identifies tax-related opportunities and challenges, through which Hendersen delivers tax compliance and planning that help you enhance overall compliance, improve treasury and cash flow and maximize tax preferences.

Our corporate tax services including: • Corporate Tax Compliance • Corporate Tax Advisory • Indirect Taxes Advisory • Tax Heath Check • Tax Audit Defense • Transfer Pricing Arrangement

Corporate Tax Compliance

Hendersen's tax professionals provide the risk-focused and solution-oriented approaches to help you to manage your corporate tax compliance, both in China, and internationally.

Any incompliance with tax obligations can result in substantial cash outflow and administrative burden due to the increased reporting requirements, the additional tax audits and severe penalties for non-compliance.

Our tax professionals can help you to enhance the overall tax compliance in China through direct participation in your daily tax compliance work. We help you to setup full set of tax operation following the framework of the relevant tax legislations, and deliver services to efficiently and appropriately with your tax routines, such as preparation of China tax returns, and assisting you in response and management of queries from tax authorities.

Corporate Tax Advisory Services

Hendersen can assist your business operations in China in managing the overall tax liabilities through helping ensure the business activities are undertaken in the most tax efficient way. Our professionals have extensive experience in advising multinational companies to formulate tax strategies in China. With the professional experience, Hendersen provides corporate tax planning and consultation to foreign investors at both the pre-investment and operational stage and assists them to obtain tax preferences where possible.

Our professionals advise on various China corporate taxes, including business tax, foreign enterprise and enterprise income taxes, value added tax and stamp duty, etc.. We can also advise on the tax implications of corporate restructuring, M&A, and conduct tax due diligence.

Indirect Tax

Hendersen provides indirect taxes (VAT, Business Tax, Consumption Tax and etc.) services that can help you ensure indirect tax compliance as well as identify opportunities for indirect taxes savings, which helps you strengthen the bottom-line profitability, improve indirect indirect tax-related treasury and thus increase the values to the shareholder.

Tax Health Check

Tax Health Check is an overall professional review on the tax positions of your China entities to understand whether they are complying with the relevant tax laws and regulations, which ensure the tax robustness and prevent tax risks on a proactive way.

During recent years, the China tax authorities are tightening the administrations on tax collections. Failure in reporting or payment of taxes properly can lead to penalties (maximum 5 times of the outstanding taxes) and surcharges (about 18% per annum on the outstanding taxes). In extreme case, the business of the entity will be cancelled and the management will be exposed to the public. Hence, tax health checks are very important and are popular among FIEs in China for risk management purposes.

The main benefits from a tax health check include:

• To assess the overall compliance level of the China operations, identify non-compliance areas and grey areas and work out appropriate course of actions to minimize the tax exposures;
• To assess the effectiveness and efficiency of the operating structure as well as tax and regulatory functions;
• To provide practical programs to improve the operational effectiveness and efficiency of the above functions;
• To identify possible planning measures that can derive net savings and streamline cash flows.

A tax health check review would normally focus on the following types of China corporate taxes:

• Foreign enterprise income tax
• Withholding tax
• Business tax
• Value added tax
• Consumption tax
• Urban real estate tax
• Deed tax
• Stamp duty

This list basically covers the taxes that FIEs would be subject to. Depending on the needs of the entity concerned, this list could be further changed.