Corporate Tax Services

Why China tax is harder than it looks

Most multinational tax directors describe managing China tax as less about reading the law and more about navigating its implementation. The headline statute is short, but a dense body of circulars, local interpretations and sectoral notices governs how it is applied. Four features shape most of the work we do:

• Tax incentives — including High and New Technology Enterprise (HNTE) status, Software and Integrated Circuit (IC) relief, and regional Encouraged-Industries Catalogue policies — require advance qualification and annual self-assessment; they are not automatic and are routinely challenged on subsequent filing.
• The State Taxation Administration (STA) and local in-charge bureaus interpret the same provision differently across provinces, and increasingly share data with the public security and customs authorities. A position accepted in Shanghai may be contested in Chengdu.
• Annual corporate income tax (EIT) returns, VAT general taxpayer filings and the connected-party reporting forms are revised every year. Local finance and tax staff frequently run on previous-year forms and miss structural changes.
• Transfer pricing is under sustained scrutiny under SAT Announcement 6 (2016) and the 2024 implementation of BEPS 2.0 Pillar Two; controlled transactions, cost contribution arrangements and intra-group services each have separate documentation and benchmarking expectations.

Our services

Compliance

We prepare and review China EIT, VAT, withholding tax, stamp duty and individual income tax filings for foreign-invested enterprises (FIEs), representative offices, branches and joint ventures. Our work includes monthly and quarterly pre-filing reviews, reconciliations between the PRC GAAP and IFRS ledgers, and management of the fapiao lifecycle from issuance through verification and archiving. Where the in-charge bureau raises queries, we respond on the client's behalf and document the conclusions for future cycles.

Advisory

We advise on the tax-efficient structuring of inbound and outbound investments, intragroup financing, IP holding, and cross-border supply chains. Our work covers qualifying for and maintaining preferential EIT rates (HNTE, software, regional catalogues), treaty-based reductions on dividends, interest and royalties, and the design of holding structures that withstand challenge under the general anti-avoidance rule (GAAR).

Indirect tax

Our indirect tax practice covers VAT (general and small-scale taxpayers), consumption tax, environmental protection tax, resource tax, deed tax, stamp duty, real estate tax and the land appreciation tax (LAT) that applies on disposal of real property and equity interests in property-holding companies. We assist with input-credit optimisation, the treatment of cross-border services and intangibles under the "境外 VAT" refund mechanism, and the indirect tax consequences of corporate restructuring.

Tax health check

A health check is a forward-looking review of an entity's tax positions, typically commissioned ahead of a sale, audit cycle or SAT risk-management push. We benchmark the client's filings and documentation against current practice, identify grey areas and exposures, and agree a remediation plan with management. Common areas of exposure include: VAT on cross-border services, withholding tax on royalties and management fees, the qualification basis for HNTE status, and the treatment of shareholder loans.

Audit defence and disputes

Where a tax audit, assessment or public security referral escalates, we act as the client's representative in dealings with the in-charge bureau, the provincial STA and, where necessary, the Ministry of Finance. We prepare defence files, support administrative review and litigation, and where appropriate negotiate settlement within the framework of the STA's published penalty discretion guidance.