China - Register for Capital Gain Tax

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Procedure

The application of capital gain tax is complex than withholding tax applied on income payments Related legislation has been set up recently and is subject to interpretation as very little guidance/experience is available.

In some cases a certain status or registration in the source country is a pre-requisite to benefit from a domestic or DTT exemption.

There are many countries, e.g. China, where the application of capital gains tax is still unclear. In such situations it is essential for you to know whether to accrue for realised and potentially unrealised capital gain tax to ensure proper accrual and avoid late penalty interests.

Firstly, you must calculate the gain or loss arising on the asset you sold. At its simplest this is the difference between the sale proceeds and the aggregate of the cost of the asset, acquisition and disposal costs and enhancement expenditure. Depending on when the expenditure was incurred an allowable adjustment for inflation (this is known as indexation) may be made. In some instances, for example where an asset is disposed of by gift or acquired on the death of the previous owner, the market value is substituted for the sale proceeds and actual cost.

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Required Documents

• An industrial and commercial business license or other similar permit of business operation
• A contract, agreement and articles of association
• The unified organizational code
• The ID card, passport or other valid ID certificate of the legal representative, or responsible member of owner
• Other documents and information demanded by the tax authorities of a province, autonomous region or municipality directly under the State Council

Office Locations & Contacts

State Administration of Taxation
Address: Yangfangdian Road, Haidian District, on the 5th
Zip: 100038
Tel: 010-63417114
Website: http://www.chinatax.gov.cn

State Administration for Industry and Commerce People's Republic of China
Address: 8 Sanlihe Donglu, Xichengqu, Beijing, 100820, P. R. China
Phone: +86-10-68010463/68013447
Facsimile: +86-10-68010463/68013447
Email: [email protected]
Contact
Address

Eligibility

Capital gains tax is levied at 20 percent and must be paid on the transfer of assets such as buildings, equipment, vehicles, securities and land use rights.

Investments: Chinese residents and non-domiciles who are long-term residents in the country must also pay tax on all worldwide investment income. Foreigners who have been resident in China for less than five years generally need only pay tax on income from their Chinese investments.

Property: Residences that have been owned and used by an individual for at least five years are not subject to capital gains tax when they are sold; any losses on a sale are also not deductible against taxable income.

Stocks: There is a provisional exemption for gains made on stock transfers listed on the Chinese stock exchange.

Fees

Explain the fees structure which is required for obtaining the certificate/document.

Validity

Explain the time until which the certificate/document is valid.
e.g. Birth Certificate Valid Forever

Documents to Use

Please attach documents that can be used by people. e.g. links

Sample Documents

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Processing Time

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Related Videos

Videos explaining the procedure or to fill the applications. 
Attach videos using the following tag <&video type="website">video ID|width|height<&/video&> from external websites.
Please remove the "&" inside the tags during implementation.
Website = allocine, blip, dailymotion, facebook, gametrailers, googlevideo, html5, metacafe, myspace, revver, 
sevenload, viddler, vimeo, youku, youtube
width = 560, height = 340, Video ID = Can be obtained from the URL of webpage where the video is displayed.
e.g In the following url "http://www.youtube.com/watch?v=Y0US7oR_t3M" Video ID is "Y0US7oR_t3M". 
	

Instructions

An individual's capital gains are taxable in China at the rate of 20%.

Capital gains tax for a Chinese company is added to the regular tax.

A 10% deduction at source is made from the capital gains of a foreign company in China.

On taxing capital gains from the sale of real estate, when calculating the capital gain the purchase cost is deducted from the sale price at the 20% rate.

Required Information

• The name and the number of the ID card, passport or other valid ID document of the institution, legal representative or owner
• The residence or business address
• The type of registration
• The accounting system
• The form of production and business operation
• The scope of production and operation
• The total amount of capital (fund), investment
• The term of production and operation
• The name and telephone number of the financial chief
• Other information specified by the State Administration of Taxation

Need for the Document

A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property.

Information which might help

A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

For equities, an example of a popular and liquid asset, national and state legislation often has a large array of fiscal obligations that must be respected regarding capital gains. Taxes are charged by the state over the transactions, dividends and capital gains on the stock market. However, these fiscal obligations may vary from jurisdiction to jurisdiction.

The applicable tax rate for capital gains in China depends upon the nature of the taxpayer (i.e. whether the taxpayer is a person or company) and whether the taxpayer is resident or non-resident for tax purposes. It should however be noted that, unlike common law tax systems, Chinese income tax legislation does not provide a distinction between income and capital. What commonly referred by taxpayers and practitioners as capital gain tax is actually within the income tax framework, rather than a separate regime.

Other uses of the Document/Certificate

Capital Gains Tax is a self- assessment tax. Regardless of whether you are registered for tax purposes you must calculate and pay your tax and file a return of gains and losses without being requested to do so by Revenue.

External Links

State Administration for Industry and Commerce People's Republic of China

State Administration of Taxation of the People's Republic of China

Ministry of Commerce, the People's Republic of China

Tax Law

State Administration of Taxation

Others

Tax revenues in China are collected and split between central and local government. The State Administration of Taxation (SAT) is the highest tax authority in China and it has SAT offices at the provincial and city levels responsible for collection of value added tax (VAT), consumption tax, business tax, corporate income tax and other specialized taxes. There are also local tax bureau offices reporting to the local governments and responsible for collecting business tax, individual income tax, and other specialized taxes. In addition, imports and exports are subject to customs duties, and notably, VAT and consumption tax which are collected by the General Administration of Customs and its subsidiaries around the country.