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Asia Briefing

How to Obtain a Chinese Tax Residency Certificate

chinese1464852180_63537Certifications and licenses are more important than one would imagine in China’s business market and tax system. A tax residency certificate, for example, is crucial for multinational companies when applying for tax benefits under international tax treaties, or in cases where a foreign company wants to prove that its subsidiary is compliant with China’s tax laws. In this article, we introduce what is known as a Certificate of Tax Residency and provide detailed guidelines on how foreign expats and enterprises can obtain the certificate.

The Certificate of Tax Residency is a legal document issued by the tax bureau stating that the foreign company/employee is in tax compliance. Applying to both foreign nationals employed in China and foreign companies operating as subsidiaries, the certificate is extremely useful when it comes to having domicile, sourced income, or residence in a country other than that of one’s origin.

The purpose of this certificate is to act as legal proof that specified foreign nationals are both, and already, qualified Chinese tax residents and have their respective individual income taxes being withheld by their employers. It also provides relevant authentication for those who wish to provide documentation to their country of origin.

A detailed criteria and application process follows:

Expat Employee Applications

Chinese taxation has its own rules that are more or less contingent on time spent in China, sourced income location, and taxpayer status, as well as applicable double taxation agreements (DTAs) in place. Specifically, foreign individuals seeking to apply for the Chinese tax residency certificate must have held domicile in China for a minimum of one year. More can be found here on the various taxation parameters.  

It should be clear that issuance of this certificate is not an automatic method of avoiding taxation requirements in foreign individuals’ home jurisdiction. Foreign employees should first communicate with their respective tax authorities in their home countries on the status and adequacy of the Certificate of Tax Residency.

A set of required documents is to be prepared for the local tax bureau. They include:

  • Application form
  • Copy and original passport
  • Copy of tax registration certificate of employer
  • The original PRC individual income tax and other tax payment receipts (if no tax payment is provided a written explanation letter is required)
  • Supporting documents for PRC residence days
  • Other supporting documents required by the tax authority in charge

Company Applications

The requirements for foreign national individuals do not exist for subsidiaries. The following documents need to be submitted to the local tax bureau:

  • Application form
  • Copy and the original tax registration certificate
  • Tax clearance certificate in the current fiscal year (if no tax payment is provided, a written explanation letter is required)

A few specifics to keep in mind are that the application procedure might be different in practice, and the time required for issuing the certificate can vary by region and tax authority. For example, in Shanghai, tax authorities can issue the certificate in five business days, while in Shandong province the process can take around 20 working days. 

Since its establishment in 1992, Dezan Shira & Associates has been guiding American investors through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, including liaison offices in Boston and Waltham specifically established to support our American clients, we are your reliable partner for business expansion in Asia and beyond. For inquiries, please email us at [email protected]. For further information about our firm and how we can support American investors in Asia, please visit our North American Desk.