November 24, 2008
Circular on Levying Withholding Tax on PRC-Sourced Interest Income Derived by Non-Resident Enterprises
On November 24, 2008, the State Administration of Taxation issued the Circular on Levying Enterprise Income Tax ("EIT") on PRC Originated Interest Income Derived by Non-Resident Enterprises (the "Circular"), effective January 1, 2008, retroactively. The Circular provides that when PRC domestic financial institutions make payments of interest to foreign banks and when foreign-invested financial institutions make payments of interest offshore, they shall withhold and make payments of EIT on such interest payment on behalf of the foreign banks or other entities that receive the payment. The Circular invalidates a circular issued in 1997 which suspended collection of withholding EIT on inter-bank and intra-bank loan interests paid by foreign-invested financial institutions to offshore entities.
Copyright ©2009 by Kaye Scholer LLP. All Rights Reserved. This publication is intended as a general guide only. It does not contain a general legal analysis or constitute an opinion of Kaye Scholer LLP or any member of the firm on the legal issues described. It is recommended that readers not rely on this general guide but that professional advice be sought in connection with individual matters. References herein to "Kaye Scholer LLP & Affiliates," "Kaye Scholer," "Kaye Scholer LLP," "the firm" and terms of similar import refer to Kaye Scholer LLP and its affiliates operating in various jurisdictions.
Copyright ©2009 by Kaye Scholer LLP. All Rights Reserved. This publication is intended as a general guide only. It does not contain a general legal analysis or constitute an opinion of Kaye Scholer LLP or any member of the firm on the legal issues described. It is recommended that readers not rely on this general guide but that professional advice be sought in connection with individual matters. References herein to "Kaye Scholer LLP & Affiliates," "Kaye Scholer," "Kaye Scholer LLP," "the firm" and terms of similar import refer to Kaye Scholer LLP and its affiliates operating in various jurisdictions.
