Participating in investing activities means investors will then have to pay taxes based on their investment returns and business operations. Different types of investments usually involve different tax codes as well as some tax incentives regulated by the local tax authorities. In order to prevent a wide tax burden, it is essential for investors to have comprehensive knowledge about local tax regulations.
Among all types of investments, onshore investment’s tax rules can be the most straightforward, yet they are still confusing for many. Investors need to pay various categories of tax, including income tax, value-added tax and other specific taxes based on detailed operating activities covered by the investments.
On the other hand, offshore investments involve much more complicated tax regulations as well as potentially serious tax risks. While many investors are looking forward to receiving tax exemptions and benefits from regions of investments, they are also exposed to the risks of facing conflicts tax systems, double taxation and relevant tax disputes.
The Chinese government has been improving its tax environment over the years aiming to create a stricter and fairer business environment for local and foreign investors. Regarding double taxation risk, China has signed Double Taxation Agreements (DTAs) with 99 countries around the globe, as well as with Hong Kong, Macau and Taiwan. DTAs serve the purpose of preventing the return from offshore investments being taxed more than once. Besides, China has been an active participant in Base Erosion and Profit Shifting (BEPS) concerning many unfair tax practices internationally, including preventing tax evasion from taking advantage of tax havens and poorly regulated local tax rules through offshore investments. China has been upgrading its tax policies along with its economic development; these improvements have attracted more investors. But on the other hand have made taking correct tax actions more difficult for investors with no external support.
As a China-focused accounting firm, LehmanBrown International Accountants has tax experts who are experienced in onshore/offshore investment tax issues and can provide investors with onshore/offshore investment consulting services. We can guide our clients towards applicable tax exemptions and benefits, and prevent possible illegal tax practices. LehmanBrown is able to give proper tax advice to maximise our clients’ investment return.
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