comprehensive tax solutions in china

Comprehensive tax solutions in ChinaPartnering you along the pathway to growth

Contents

3 A dedicated team to serve you

4 Corporate business and tax solutions

5 Transaction tax

6 Tax certif ication audit

7 Individual income tax

8 Transfer pricing

9 Company incorporations, alterations and deregistrations

10 Outsourcing services

11 Hong Kong tax

Comprehensive tax solutions in China 3

A dedicated team to serve you

World class services

Grant Thornton China is the Chinese member firm of Grant Thornton International Ltd, one of the world’s leading organisations of independent assurance, tax and advisory firms. Leveraging on its extensive global network and vast resources spanning over 100 countries and regions, we can provide world class tax services that combine local knowledge with global perspectives.

Nationwide network

Established in 1981, we are one of the country’s first accounting firms. Now, we have more than 20 offices with 160 partners and 3,000 staff throughout China. Our unique “one firm, one China” approach enables us to offer a full range of assurance, tax, advisory, asset valuation and project cost management services to over 140 public companies and 2,000 state owned enterprises, as well as private companies and foreign invested companies.

Industry experience

We have provided services to numerous foreign invested enterprises, state owned enterprises and private enterprises in a wide range of industries, such as automobiles, electronics, pharmaceuticals, machinery, metal, chemicals, logistics, e-business, consumer products, real estate, food and beverages, textiles, financial services, and business services. Our profound industry experience allows us to develop distinctive and industry focused solutions for our clients.

Professional tax team

Our specialised tax team offers tax compliance, tax advisory and other financial advisory services to foreign enterprises and multinational corporations. Authorised by the China Certified Tax Agents Association, our high qualification testifies to the extensive and successful experience we have accumulated in dealing with Chinese tax issues. Our extensive global network, fruitful tax experience and broad tax practices support our endeavours to provide practical tax solutions to our clients.

We are one of the longest-established professional accounting and advisory f irms in China. Combining local knowledge with global insight, we provide tax services for the business activities of both domestic and international companies.

4 Comprehensive tax solutions in China

Corporate business and tax solutions

As your reliable business partner, our corporate tax service team can help your Chinese entities achieve and maintain tax compliance and optimise their tax position by leveraging the full spectrum of tax efficient shareholding structures, trading arrangements and the implementation of reasonable tax planning.

Specialising in the broad range of industries that our clients are engaged in, we aim to understand and deal with the issues you encounter in your daily operations, so that we can develop and deliver robust solutions that satisfy their diverse needs. Our business and tax services include:

PRC inbound investment navigation

• entry strategy advice for foreign investors

• optimisation of onshore/offshore holding structures.

Corporate/supply chain restructuring

• restructuring existing businesses to achieve overall tax efficiency and operational effectiveness.

Tax advisory services for daily operations

• assistance with tax disputes and tax audit defences, tax health checks, corporate tax planning, preparation of tax provisions in compliance with relevant accounting standards or local Chinese requirements, advice on the tax affairs of non-tax-residents and foreign contractors rendering services in China, etc.

Our business and tax services are tailor-made to suit the business needs of your existing and proposed investments and operations in China.

Corporate tax compliance

Our solutions are designed to minimise your exposures to direct and indirect taxes, to shape your business the way you want it, and to help you navigate the complexities of tax arrangements, so that you can:• achieve your business objectives by

reducing your tax risks and ensuring you fulfil your tax obligations

• improve your business and operational efficiency


Transaction tax

Employing our top-notch tax expertise and experience of cross border transactions, we will cover every tax-related aspect of each stage of your proposed business mergers and acquisitions in the most cost effective way.

As a crucial element of our integrated transaction advisory service, we will provide you with a comprehensive set of tax offerings that will incorporate every possible tax support into each stage of the deal process. We can also assist in the following specific areas, and our services can be further structured to suit your specific needs better:

Stage1 Transaction strategy – pre-deal structuring

assistance to purchasers when they are assessing targets, with a view to their potential in terms of tax eff icient acquisition structuring.

Stage3 Transaction effectiveness – post-deal implementation

assistance with ensuring the seamless implementation of the desired structure, and monitoring of ongoing acquisition issues.

Transaction lifecycle

Stage2 Transaction execution

• taxduediligence- identif ication of tax exposures

and tax assets and advice on their implications, and obtaining information relevant to effective structuring and modelling

• taxstructuring- development of potential tax

effective structures- evaluation of projected cash

flows and relevant tax costs.• sharepurchaseagreementreviews

- advice on drafting relevant representations, warranties and indemnity clauses.


Tax certification audit

To help you file your annual CIT returns, our Chinese certified tax agents will apply their professional knowledge and judgment, which is in line with the relevant regulations and standards, in order to analyse basic financial and tax information and other relevant evidence you provide and issue a TCA report. Our main TCA services include:

The Chinese tax authorities have strengthened their administration of annual corporate income tax (CIT) f iling in recent years. A tax certif ication audit (TCA) report has become one of the most important supporting documents that they require. In addition, the tax authorities usually require a qualif ied TCA report during the tax deregistration and relocation process. Meanwhile, a TCA is also necessary during the f iling and settlement of land appreciation tax (LAT) issues.

Our professional tax team will act as an independent third party in issuing TCA reports, so as to facilitate CIT annual f iling, asset loss applications, company liquidations, etc.

TCA for others

• TCA on tax clearance for tax deregistration or tax relocation

• TCA on adjustments to gross profit discrepancies associated with real estate development.

TCA for the purpose of obtaining tax approval

• TCA on deductions of asset losses

• TCA on the super-deduction of R&D expenses

• TCA on accumulated tax losses carried forward.

TCA for the purpose of reporting tax

• TCA on CIT annual filings

• TCA on the liquidation of LAT.


Individual income tax

The professional human resources and global mobility service team of Grant Thornton provides a full range of value added services to address every aspect of expatriate employees’ China assignments – including visa services optimized individual income tax (“IIT”) schemes, tax compliance services, tax registration and negotiation with tax authorities and payroll services for local employees.

Our IIT compliance review and compensation package planning can facilitate the integration of your local employment and international mobility programs, in the context of your overall organizational strategy.

Individual income tax planning and advisory services

• Structuring competitive and tax effective compensation packages and formulating assignment policies and registration and administration processes in relation to expatriate services;

• Exploring alternative approaches under tax equalisation and tax protection policies;

• Conducting arrival interviews with expatriate employees to identify potential tax planning opportunities;

• Providing tailor-made financial planning and consulting services for executives, and communication with the tax authorities;

• Facilitating implementation of identified planning opportunities

• Assisting in implementing “Enterprise Annuity”; and

• Advice with respect to Chinese outbounds’ PRC IIT filing and settlement.

Individual income tax compliance services

We help our clients to ensure their employees comply with PRC IIT law and regulations in the area of mandatory filing.• Tax registration and initial filing of

expatriate employees;

• PRC IIT backlog filings by identifying Permanent Establishment (“PE”) exposures;

• PRC IIT monthly filing for expatriates and local employees;

• PRC IIT annual self-reporting for expatriates and local employees, and PRC IIT annual reconciliation filings for Chinese outbounds; and

• Performing registration with tax authorities (e.g. the registration of non-taxable allowance, entitlement to treaty benefits and share incentive plans).

Payroll services

• Assist in accounts setup for the purposes of tax payment, social security payment and housing fund payment;

• Calculation of monthly basic salary, social security and housing fund made by both the employers and local employees;

• Calculation of monthly basic salary and social security made by both the employers and expatriate employees;

• Assist in PRC IIT filing and registration and social security payments;

• Assist in salary remittance for single payment exceeding USD 50,000 to overseas bank account of the expatriate employees;

• Providing tailor-made salary report according to client’s requirement;

• Assist in payroll payment processing for expatriates and local employees; and

• Monthly paper pay-slips or e-pay-slips distribution.


Transfer pricing

Our transfer pricing team provides flexible tailor-made solutions that add value and satisfy the diverse needs of a wide range of clients. Its aim is to gain an in-depth understanding your business, and then deal with specific transfer pricing issues. The services we provide include:

Transfer pricing risk assessment

• providing solutions that mitigate or resolve transfer pricing risks.

Benchmarking

• providing insights into the industry or market situation, and the expectations of the tax authorities

• establishing a solidly-based transfer pricing policy.

Our transfer pricing team covers mainland China and the Hong Kong SAR. Most of its core members were previously tax specialists in leading international accounting f irms who have specialised in transfer pricing services throughout their career.

The team is dedicated to providing you with a full range of transfer pricing services in China’s stringent transfer pricing administrative environment. These include transfer pricing risk assessment, benchmarking, documentation and dispute resolution, as well as advance pricing agreements and supply chain planning.

Transfer pricing documentation

• preparing a documentation package that analyses and supports our clients’ arm’s length position and serves as a critical supporting document for other purposes, such as remittances of service fees or applications for tax deductions for excessive interests under the thin capitalisation restriction

• recommending further improvements, as appropriate.

Dispute resolution

• providing a one-stop solution that covers defence files, negotiations with competent authorities, adjustment settlements and post-dispute management.

Advance pricing agreements

• ensuring the validity of the adopted transfer pricing policy in the future, and resolving historical transfer pricing issues and disputes.

Transfer pricing planning

• help clients achieve transfer pricing compliance and tax efficiency.


Company incorporations, alterations and deregistrations

Establishment of corporate structures (companies/representative off ices/branches)We help international investors set up companies successfully in China. To ensure this, we conduct careful research, and consider and select the most favourable registration location for achieving the company’s long-term vision. Our effective plans give enterprises a strong foundation on which they can achieve sustainable growth and organisational effectiveness in China. We can assist with:• business name pre-approval

applications• business investment feasibility study

reports• drafting of articles of association • scope of business and capital

contributions• assistance with pre-approval

procedures for specific industries.

We help international investors do business in China by providing one-stop services for company incorporations, alterations and deregistrations.

Alterations

A company’s plans, strategies and decision making processes will need to change over time in response to China’s continuously evolving market environment. It is a big challenge to get a company’s initial setup and registration and the design of its structure right, in order for it to succeed in the marketplace. We can quickly evaluate financial and operational issues that are adversely affecting a company’s performance, identify any risks that may exist, assess strategic alternatives, and develop and execute comprehensive plans to remedy those challenges.The alterations we can advise on include:• increases and decreases in capital,

share transfers and corporate mergers• changes in business registration

details, such as investors, business addresses, scope of business and operating periods

• appointments and changes to the membership of the board of directors, the investor’s authorised persons, legal representatives (chief representatives) and supervisors

• amendments to the articles of association.

Deregistrations

If you decide to close your business in China due to a strategic decision or other reasons, our team will adopt a holistic approach to provide you with in-depth advice and balanced insights concerning the deregistration and liquidation of your company, including the following aspects:• drafting of deregistration

applications• drafting of investors’ deregistration

resolutions• submission of deregistration

applications to the authorities• tax clearance procedures for

deregistration• deregistration applications to the

foreign exchange control authorities concerning the company’s foreign debt exemption.


Outsourcing services

Bookkeeping and accounting report services

• accounting and reporting: preparing financial statements in accordance with Chinese accounting standards (PRC GAAP )

• GAAP conversion and reconciliation: converting Chinese financial statements into international financial statements that comply with international accounting standards (IFRS ) or American accounting standards (US GAAP)

• establishment of accounting reporting systems: providing professional accounting expertise and support to clients, so they can adopt and implement a reporting system that will achieve and satisfy local compliance requirements and the management’s needs.

Financial management is an important aspect of corporate management and operations. Our professional corporate service team specialises in providing f inancial advice and outsourcing services. It uses international know how combined with local knowledge to help clients to achieve the best possible results by enhancing their performance and eff iciency.

Cash management

• reviews of staff expense claims and the processing of reimbursements in accordance with internal control procedures laid down by corporate headquarters

• assistance with the payroll process, including the computation of withholding payments, and the payment of salaries

• assistance with essential procedures relating to the opening, maintenance and closure of bank accounts.

Assistance in f inancial management functions

• reviews of corporate financial reporting processes, professional financial advice and optimisation of financial reporting efficiency

• advice on daily accounting issues, based on the team’s professional knowledge and experience

• assistance with the preparation of cash and financial budgets.

Financial assistance and outsourcing

• drawing on its in-depth knowledge of our clients and its professional expertise, the team provides timely and assured financial support to help them overcome difficulties due to shortages of accounting staff.

Value added services

• administrative assistance with archiving and record keeping

• helping clients issue tax invoices and compile tax statistics and declarations for prompt submission to the tax bureau.


Hong Kong tax

Our tax team in Hong Kong consists of tax professionals who possess extensive experience in handling the tax affairs of multinational corporations, listed companies and small and medium enterprises (SMEs), as well as individuals and expatriates. It also has extensive experience of mainland China’s tax system and knowledge of overseas tax regimes. These advantages, together with assistance from our network of overseas offices, ensure our clients’ tax affairs can be considered and handled in a seamless, global and all round way.Our Hong Kong tax team will be pleased to discuss your concerns and service needs in depth with you, so that it can provide tailor-made solutions.

Hong Kong retains its own tax regime under the “one country two systems” principle. Mainland China’s tax system does not apply to Hong Kong.

Our tax team in Hong Kong provides the following services:

• Hong Kong tax compliance (Profits Tax, Salaries Tax and Property Tax)

• handling Inland Revenue enquiries and investigations

• pre-IPO tax reviews and planning for both your company and its major shareholders

• tax efficient structuring of business operations

• tax efficient remuneration packages • cross border and international tax

advice• tax due diligence reviews for M&As• M&A tax-related support services,

e.g. negotiations, support, SPA reviews, backlog tax filings, etc.

• advice on Hong Kong tax and stamp duty.


About Grant Thornton

Grant Thornton ChinaEstablished in 1981, Grant Thornton is one of China’s first accounting firms. As the only member firm of Grant Thornton International Ltd in the country, we have more than 160 partners and around 3,000 professionals working in over 20 strategically aligned offices throughout mainland China and the Hong Kong SAR. Our unique “one firm, one China” ethos, together with our unified methodology, risk and quality control measures and easy access to international resources, enables us to offer a full range of assurance, tax and advisory services to clients in every sector of the China market.

We provide assurance, tax and advisory services to a broad client base that encompasses over 140 public companies and more than 2,000 state owned enterprises (SOEs) privately held businesses, as well as foreign-invested enterprises. We are among the first Chinese accounting firms to become qualified to engage in securities business, futures and financial audit work. We are also a registered public accounting firm with the US Public Company Accounting Oversight Board (PCAOB), and our H-Share licence allows us to sign off audits of Chinese-incorporated companies that are listed in Hong Kong (known as H-Share companies).Grant Thornton China’s International

Business Centre (IBC) provides a gateway to the resources of Grant Thornton globally. It is led by experts in international business who are familiar with the wealth of experience of partners of member firms around the world, and who can coordinate this expertise to serve clients across national borders.

Grant Thornton International Ltd

Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, actionable advice. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients and help them to find solutions. Over 38,500 Grant Thornton people, across more than 130 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.


Research and publications

Our Tax Technical Centre (TTC) is responsible for tax knowledge management and providing internal technical support for the firm, including:• coordinating our tax specialists from

different offices to set up research teams on different industries, types of tax and products and sharing our research achievements nationwide with the view to enhancing high quality professional tax services to our clients.

• serving as the official technical exchange channel to local tax authorities, GT global member firms, specialists and other scholars in business.

• collecting, organizing, analyzing and pronouncing technical information, and producing tax publications.

Please email [email protected] to subscribe TTC Tax News (PDF).

Tax publications are available on our official website. To download latest following publications, please go to www.grantthornton.cn Publications>Tax center• tax alert (China and Hong Kong)• transfer pricing alert• interpretation of tax rules• international tax update（Global tax

newsletter, Transfer Pricing News, Asia Pacific tax newsletter, Expat news）

• Hong Kong Budget

You can also access the latest tax information by following us on WeChat (ID:GrantThornton_Tax)

where you can find the latest and the most comprehensive tax information in China, obtain professional insights on the hot topics from our tax experts, as well as gain opportunities to participate in various activities held by Grant Thornton tax team. Contents highlight:• summary of the latest tax laws and

regulations• interpretation and commentary on

tax laws and regulations• commentary on domestic and

international tax hotspot• notifications of tax seminar, training

and other activities organized by Grant Thornton

Please scan the QR code below to follow us on WeChat

Contact us

“Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton China is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.

Head of national tax services Jiang HanxiongT +86 10 8566 5588F +86 10 8566 5120E [email protected]

National tax technical centre (TTC) partnerXu DaxingT +86 10 8566 5976F +86 10 8566 5120E [email protected]

[email protected]

Service line tax leaders/ main contacts OutsourcingPan Xiaodong T +86 10 8566 5766F +86 10 8566 5120E [email protected]

Tax certification audit Yan Cheng T +86 10 8566 5576F +86 10 8566 5120E [email protected]

Transfer pricing Rose ZhouT +86 21 2322 0298F +86 21 6340 3644E [email protected]

Transaction tax William ChanT +852 3987 1399F +852 2895 6500E [email protected]

Office tax leaders BeijingPan Xiaodong Partner, Head of tax servicesT +86 10 8566 5766F +86 10 8566 5120E [email protected]

Wilfred Chiu Partner, Head of international business, Tax servicesT +86 10 8566 5828F +86 10 8566 5120E [email protected]

Yan Cheng Partner T +86 10 8566 5576F +86 10 8566 5120E [email protected]

Julie Zhang PartnerT +86 10 8566 5777F +86 10 8566 5120E [email protected]

Li Zhaoxia PartnerT +86 10 8566 5955F +86 10 8566 5120E [email protected]

Gao YinanPartnerT +86 10 8566 5575F +86 10 8566 5120E [email protected]

Sun Gang PartnerT +86 10 8566 5223F +86 10 8566 5120E [email protected]

ShanghaiRose Zhou Partner, Head of tax servicesT +86 21 2322 0298F +86 21 6340 3644E [email protected]

Roy Zhang PartnerT +86 21 2322 0240F +86 21 6340 3644E [email protected]

Sally Xu PartnerT +86 21 2322 0224F +86 21 6340 3644E [email protected]

Richard Bao Partner T +86 21 2322 0213F +86 21 6340 3644E [email protected]

GuangzhouEnoch ChanPartner, Head of tax servicesT +86 20 3896 3157F +86 20 3896 3399E [email protected]

Zhou YingtaoPartnerT +86 20 3896 3366F +86 20 3896 3399E [email protected]

ShenzhenGao Hong PartnerT +86 (755) 3299 5777F +86 (755) 3299 5566E [email protected]

ChangchunGao YingSenior ManagerT +86 431 8869 3555F +86 431 8920 3788E [email protected]

ChengduLi ChengPartner, Head of tax services T +86 28 6150 1470F +86 28 6150 1468E [email protected]

NanjingQi Wenting Director T +86 25 8776 5253F +86 28 8776 8601E [email protected]

NanningLi Rongguo Partner, Head of tax services T +86 771 5535 538F +86 771 5566 820E [email protected]

YinchuanLi liPartner, Head of tax servicesT +86 951 5699519M +86 13519289831E [email protected]

Hong KongWilliam Chan Partner, Head of tax services T +852 3987 1399F +852 2895 6500E [email protected]

For more information, please visitwww.grantthornton.cn

www.grantthornton.cn

© 2015 Grant Thornton China. All rights reserved.

“Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires.

Grant Thornton China is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.

This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this publication.

comprehensive tax solutions in china

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