Updated: 2024-07-26 Source: STA General Office

Provisional Measures for Tax Administration on Non-residents Contracting Engineering Projects and Providing Services

State Taxation Administration Order No.19 of 2009

Chapter I    General Provisions

Article 1    In order to regulate the administration of levying tax on non-residents contracting engineering projects and providing services in China, the Measures are formulated in accordance with relevant laws and regulations such as Tax Collection and Administration Law of the People’s Republic of China (hereinafter referred to as Tax Collection and Administration Law) and its Implementation Rules, Enterprise Income Tax Law of the People’s Republic of China (hereinafter referred to as Enterprise Income Tax Law) and its Implementation Regulations, Provisional Regulations for Business Tax of the People’s Republic of China and its Implementation Regulations, Provisional Regulations for Value Added Tax of the People’s Republic of China and its Implementation Regulations and treaties concluded between the government of the People’s Republic of China and the government of other jurisdictions on the avoidance of double taxation (including the tax arrangements with Hong Kong and Macao Special Administrative Regions, hereinafter collectively referred to as “tax treaties”), etc.

Article 2    The term “non-residents” mentioned in the Measures consists of non-resident enterprises and non-resident individuals. “Non-resident enterprise” shall refer to an enterprise that is established in accordance with the law of a foreign country (region) and whose effective management is located outside China but with an establishment or a place within China, or an enterprise that does not have an establishment or a place in China, but has income derived from China. “Non-resident individual” shall refer to an individual that has no domicile in China and does not live in China or an individual that has no domicile in China and has lived in China for less than one year.

Article 3    The term “contracting engineering projects” mentioned in the Measures shall refer to contracting construction, installation, assembly, repair, decoration, exploration and other engineering projects.

The term “providing services” mentioned in the Measures shall refer to engaging in processing, repair and fitting, transportation, warehouse leasing, consultation agency, design, culture and sports, technical service, education and training, tourism, entertainment and other services in China.

Article 4    The term “the administration of taxation on non-residents contracting engineering projects and providing services in China” mentioned in the Measures shall refer to the administration of tax matters on business tax, value added tax and enterprise income tax of non-residents. The administration that involves taxes such as individual income tax and stamp tax shall be implemented in accordance with relevant provisions.

Chapter II    Tax Sources Administration

Section I   Administration on Registration and Recordation

Article 5    A non-resident enterprise contracting engineering projects or providing services in China shall, within 30 days after the date of signing the project contract or agreement (hereinafter referred to as the contract), go through the tax registration formalities with the tax authority in the place where the project is located.

A domestic institution or individual that is obliged to withhold tax in accordance with laws and administrative regulations shall, within 30 days of the occurrence of the withholding obligation, go through the tax withholding registration formalities with the tax authority in the place where the institution or individual is located.

A domestic institution or individual offering engineering project or service contracts to non-residents shall, within 30 days after the date of signing the project contract, submit to the tax authority in charge Report Form for Domestic Institutions and Individuals Offering Engineering Projects or Services Contracts (see Annex 1), with non-resident tax registration certificates, contracts and photocopies of authorization letter of tax agency, or written statements of the non-residents on relevant matters.

Article 6    Where a non-resident enterprise contracts engineering projects or provides services in China, it shall, within 15 days of the completion of the project, submit relevant photocopies of the project completion certificate and verification certificate, etc. to the tax authority in the place where the project is located, and go through the tax deregistration formalities in accordance with the relevant provisions of the Administrative Measures for Tax Registration.

Article 7    Where the contract regarding a domestic institution or individual offering engineering projects or services contracts to non-residents is changed, the contract-offering party or the service receiver shall, within 10 days after the date of change, submit Report Form for Non-residents on Project Contract Change (see Annex 2) to the tax authority in charge in the place where it is located.

Article 8    A domestic institution or individual in China offering engineering projects or services contracts to non-residents shall, within 30 days after the date of acquisition of the invoices related to payments of project and other payment vouchers, submit Report Form for Non-residents on Project Contract Payment (see Annex 3) and photocopies of payment vouchers to the tax authority in charge in the place where it is located.

Where the domestic institution or individual does not pay project fees or service fees to non-residents, it shall, before the verification certificate is issued upon the completion of the project, report to the tax authority in charge the relevant information such as the progress of the project, name of the payer and the amount and date of payments.

Article 9    Where the tax authority in charge of a domestic institution or an individual offering engineering projects or service contracts to non-residents is not the same with the tax authorities in charge of the non-residents, the domestic institution or individual shall, within 15 days of the expiration of the filing term for non-residents, submit the photocopies of tax filing certificates of the non-residents to the tax authority in charge of the institution or individual in China.

Section II   Tax Sources Information Management

Article 10    Tax authorities shall establish tax sources supervision mechanisms, acquire and utilize the relevant information on non-residents contracting engineering projects and providing services in China from departments of Development and Reform Commission, construction, foreign exchange administration, commerce, education, culture and sports, etc., and may provide feedback on the utilization of information to the relevant departments.

Article 11    Where a tax related matter of a non-resident or a domestic institution or individual concerns the state tax bureau and the local tax bureau at the same time, the tax authority in charge shall, after dealing with the tax related matter, formulate Information Transfer Form for Non-residents Contracting Engineering Projects and Providing Services (see Annex 4), and transfer the form to the other party on a monthly basis to be included in the non-resident tax administration files.

Chapter III    Filing and Collection

Section I    Enterprise Income Tax

    Article 12    Where a non-resident enterprise contracts engineering projects or provides services, its enterprise income tax shall be computed each tax year and be prepaid on a quarterly basis, be accounted and settled by the end of the year, and the enterprise shall settle tax payment upon completion of the construction project or after the contract is fulfilled.

Article 13    When filing enterprise income tax, a non-resident enterprise shall submit the tax return truthfully, and attach the following documents:

(1) the final account (settlement) report of the engineering projects (services) or other demonstration documents;

(2)  a written report on the names, nationalities, time of entry and exit, work time in China, locations, contents, wage standards, payment methods and relevant expenses of foreign personnel participating in the engineering project or service project;

(3)  financial accounting report or financial status statement;

(4) where a non-resident enterprise does not constitute a permanent establishment in China in accordance with tax treaties, and needs to claim tax treaty benefits, it shall submit Report Form for Non-resident Enterprises Contracting Engineering Projects and Providing Services on Claiming Tax Treaty Benefits (hereinafter referred to as the Report Form, see Annex 5), and attach the tax residence certificate and other proof documents required by the tax authority.

Where the non-resident enterprise fails to submit the Report Form and relevant proof documents, or it does not meet the conditions for tax treaty benefits owing to changes in project implementation, it shall not claim tax treaty benefits, and shall pay tax in accordance with Enterprise Income Tax Law.

Article 14    Where the tax authority in charge at the county (district) level or above in the place where the payer of engineering projects or services is located confirms, on the basis of Annex 1 and the proof documents on filing and paying tax of a non-resident enterprise or other information, one of the three circumstances listed in Article 106 of Implementation Regulations for Enterprise Income Tax Law exists, it may designate the payer of engineering projects or services as the withholding agent, and deliver Notice of Obligation of Withholding Enterprise Income Tax of Non-resident Enterprises Contracting Engineering Projects and Providing  Services (see Annex 6) to the designated party.

Article 15    A designated withholding agent shall, within the filing term, submit the report form on withholding enterprise income tax and other relevant documents to the tax authority in charge.

Article 16    Where a designated withholding agent fails to fulfill the withholding obligation according to the law or cannot fulfill the withholding obligation, the non-resident enterprise concerned shall file tax returns and pay tax in the place where the project is located. The tax authority in charge shall, within 15 days after the date of confirming that the withholding obligation has not been fulfilled, inform the non-resident enterprise of filing tax returns and paying tax in the place where the project is located.

Article 17    Where a non-resident enterprise fails to pay tax within the prescribed term, the tax authority in charge in the place where the project is located shall, within 15 days of overdue payment, collect the information on other income derived in China by the non-resident enterprise, including types of income, names and addresses of payers, amounts, ways and dates of payments, etc., and issue Notice of Recovering Tax Arrears of Non-resident Enterprises (see Annex 7) to the payer of other income items (hereinafter referred to as the other payer), and recover tax arrears and surcharge for overdue payment.

The items of other income derived in China by the non-resident enterprise shall include income of the non-resident enterprise from engaging in other engineering projects or service projects, and other income items stipulated in the second and third paragraph of Article 3 of Enterprise Income Tax Law. Where the non-resident enterprise has multiple payers, the tax authority in charge in the place where the project is located shall confirm the order of tax recovery based on factors such as the accuracy of information, income amount and costs of recovery. 

Article 18    The tax authorities in charge of other payers shall provide necessary information and assist with the tax authority in charge in the place where the project is located to carry out tax recovery.

Section II   Business Tax and Value Added Tax

Article 19    Where a non-resident has any taxable behavior related to business tax or value added tax, and has established an operation organization in China, it shall self-file and pay business tax or value added tax.

Article 20    Where a non-resident has any taxable behavior related to business tax or value added tax without setting up an operation organization in China, its agent shall be the withholding agent of business tax or value added tax; if there is no agent, the contract-offering party, service receiver or buyer shall be the withholding agent.

If the engineering contract-offering party, service receiver or buyer fails to provide the following proof documents to the tax authority in charge in the place where it is located within 30 days after the date of signing project contracts, it shall fulfill the business tax or value added tax withholding obligation:

(1) photocopies of certificates of industrial and commercial registration and tax registration of domestic institutions or individuals of non-resident taxpayers and the proof documents of their engaging in operation activities.

(2) the authorization letter for entrusting domestic institutions or individuals of the non-resident, and the confirmation proof of the entrusted party.

Article 21    A non-resident shall fill out and submit the tax return truthfully and attach the following documents, when filing tax returns of business tax or value added tax:

(1) the final account (settlement) report of the engineering projects (services) or other demonstration documents;

(2) the names, nationalities, time of entry and exit, work time in China, locations, contents, wage standards, payment methods and relevant expenses of foreign personnel participating in the engineering projects or service projects or providing processing or repair and fitting services;

(3) Other relevant documents required by the tax authority in charge in accordance with the law.

Chapter IV    Follow-up Administration

Article 22    The tax authorities in charge shall, following the principle of managing on project basis, establish administrative accounts and tax files for non-residents contracting engineering projects and providing services, and collect timely the information on contract execution, construction progress, payments, paying foreign exchange overseas, payments of taxes of the engineering projects and services.

Article 23    Where the tax authority in charge has doubts on the payment vouchers acquired overseas by a domestic institution or individual in China, it may require the domestic institution or individual to provide confirmation certificates issued by overseas notary public offices or certified public accountants, and the said vouchers can be used for accounting only after they are reviewed and approved by the tax authority.

Article 24    The tax authority in charge shall carry out follow-up administration for non-residents that have claimed tax treaty benefits, review the authenticity and accuracy of the report forms and proof documents submitted by them, and conduct confirmation on their not constituting permanent establishments. For taxpayers that do not meet the conditions for claiming tax treaty benefits and fail to fulfill their tax obligations, the tax authority shall recover the overdue tax, surcharge for overdue payment and fine.

Article 25    The tax authority shall utilize the information on payments of foreign exchange, including historical records of payment of service trade made by domestic institutions and individuals to non-residents and information on payment plans for new projects contracted during the current year, etc., so as to monitor the contracting engineering projects and services. Where there is any unpaid tax before the payment of foreign exchange, the tax authority shall notify timely the taxpayer or the withholding agent to pay the tax. It may also, when necessary, notify the foreign exchange department concerned or the designated foreign exchange payment bank to suspend the payment of foreign exchange in accordance with the law.

Article 26    The tax authority in charge shall implement key tax sources monitoring and administration on key projects at state, provincial and city levels that are participated in by non-residents, including contracting engineering projects and providing services involved in projects, such as urban infrastructure construction, energy construction, introduction of enterprise technological equipment, etc., and on other contracts that exceed 50 million yuan and are participated in by non-residents; and it shall carry out key inspections on matters such as whether the contractor and the contract offering party are related, contract execution status, confirmation of permanent establishments and allocation of domestic and oversea service income, etc.. If any problem is found, it may carry out information exchange, anti-avoidance audit or tax investigation.

Article 27    The tax authorities of all provinces (autonomous prefectures, municipalities directly under the central government or cities specifically designated in the state plan) shall, within 45 days after the end of the year, submit Statistical Table of Key Projects of Non-residents Contracting Engineering Projects and Providing Services (see Annex 8), and the analysis report on tax revenue from enterprise income tax, value added tax, business tax, stamp tax and individual income tax that are involved in the work and changes of tax sources to the State Taxation Administration (International Taxation Department).

Article 28    The tax authority in charge may, based on its needs, carry out tax audit on the tax situation of non-residents contracting engineering projects and providing services, and, if necessary, transmit timely the audit results to the state tax bureau or the local tax bureau at the same level. The tax audit may be conducted by way of joint audit by the state tax bureau and the local tax bureau.

Article 29    The tax authority in charge may need specific information where it is difficult to acquire tax related information in China. The State Taxation Administration (International Taxation Department) may request for specific information from other contracting state (region) to the tax treaty; where a non-resident fails to fulfill its tax obligations in accordance with the law, the tax authority in charge may produce automatic or spontaneous information, and submit it to the State Taxation Administration, which may inform the competent tax authority of the contracting party of non-resident’s tax violations in China; where it is necessary to carry out overseas audit on non-resident’s engineering projects and services, in accordance with the relevant provisions of exchange of information and upon the approval of the State Taxation Administration, the tax authority in charge may organize and carry out the audit.

Article 30    Where the legal representative of a non-resident enterprise or a non-resident individual that owes tax fails to settle the overdue tax and surcharge for overdue payment and fails to provide guaranty, the tax authority may inform the department of administration on exit and entry to prevent him/her from leaving the People’s Republic of China.

Article 31    Where a non-resident fails to settle tax within the prescribed term and has left the People’s Republic of China after completion of a construction or service project, the tax authority in charge may produce Notice on Tax Matter (see Annex 9) to notify the said non-resident to fulfill tax obligations within a time limit by way of letters, emails and fax, etc., and inform the party offering the contract or service receiver in China to assist in recovering the tax.

Chapter V    Legal Responsibilities

Article 32    Where a non-resident, withholding agent or agent has a tax violation when carrying out contracting engineering projects and providing services, the tax authority shall deal with the case in accordance with Tax Collection and Administration Law and its Implementation Rules.

Article 33    Where a domestic institution or individual offering engineering projects or services fails to report the relevant matters to the tax authority in charge prescribed in Article 5, 7, 8 and 9, the tax authority shall order it to make corrections within a prescribed time limit, and may impose a fine of less than 2,000 yuan; if the circumstances are severe, a fine of more than 2,000 yuan and less than 10,000 yuan may be imposed.

Chapter VI    Supplementary Provisions

Article 34    The state tax bureau and local tax bureau of all provinces, autonomous prefectures, municipalities directly under the central government or cities specifically designated in the state plan may formulate specific implementation measures in accordance with the Measures.

Annex:

1. Report Form for Domestic Institutions and Individuals Offering Engineering Projects or Services Contracts

2. Report Form for Non-residents on Project Contract Change

3. Report Form for Non-residents on Project Contract Payment

4. Information Transfer Form for Non-residents Contracting Engineering Projects and Providing Services

5. Report Form for Non-resident Enterprises Contracting Engineering Projects and Providing Services on Claiming Tax Treaty Benefits

6. Notice of Obligation of Withholding Enterprise Income Tax of Non-resident Enterprises Contracting Engineering Projects and Providing Services

7. Notice of Recovering Tax Arrears of Non-resident Enterprises

8. Statistical Table of Key Projects of Non-residents Contracting Engineering Projects and Providing Services

9.  Notice on Tax Matters

All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.