The Notice of State Administration of Taxation on Strengthening Administration of Collection of Individual Income Tax on Foreign Employees

Guo Shui Fa [2004] No.27

To the State Administration of Taxation and local tax authorities in all provinces, autonomous regions, municipalities and city specifically designated in thestate plan,
With the economic globalization and the continuous advance of the opening-up,more and more foreign employees come to our country to hold posts or engage in business activities. As the mobility of the foreign empoyees, the individual income tax policies involved are more complicated. It is difficult to determine their tax liabilities and monitor the payment of taxes, which sometimes resulted in that the phenomenon of taxes undeclared or individual income tax unpaid happens frequently. In order to strengthen the taxation administration of the individual income tax of the foreign employees and offer better and more efficient service , we issue the notice as follows:

1. Improving awareness and perfecting management system

The individual income tax management of foreign employees involves a lot of policy guidelines including the issue of judgement and division of the international taxation jurisdiction and the sprcific policies and procedures for computation the taxable income and of the amount of tax payable, the strengthening of taxation administration of foreign employees is significant to ensure the state revenue and the taxation sovereignty. All the tax bureaus across the country must be aware of the importance of strengthening taxation administration of individual income tax of foreign employees, establish and complete the post responsibility system for international taxation, recruitment more professionals and talents ,improve the scientific management process to pave sound foundation for the taxation administration of foreign individuals?personal income tax .

2. Regulating the law enforcement to ensure the execution of policies

The law governing the administration of foreign individuals?individual income tax includes the tax law and regulations of our country as well as the agreement and arrangement entered into between China and foreign countries. All the bureaus across the country should improve the education of the staff to raise their qualification and comprehend the policies .The service should be further regulated , the working system and rules should be enforced to ensure that the policy for administration of foreign individual’s individual income tax is carried our correctly to provide a fair, equity , and impartial environment for tax administration.

3. Offer better service for foreign individuals to pay taxes pursuant to law

It is the duty of taxation authorities to improve taxation administration of individual income tax of foreign individuals and offer best service for them. We must try to solve all the problem the foreign individuals may come across in filing tax returns and paying taxes. We must actively publicize taxation policies through internet, newspaper, TV, and radio to offer service in answer questions and give advice and help them understand the taxation policies of out country, and the tax payment process. We must improve cooperation between various sections including departments of entry and exit management, industry and commerce , customs, foreign trade , education , cultural , sports and science and research so as to get more information about the foreign individuals?occupation and mobility to monitor the tax source.

4. Strenghthening on management and make up for the loophole of the tax in arrear

Each bureau across the country should organize a campaign to collect arrears and unpaid taxes on the basis of self-examination and correction in line with the requirements specified below:
(1) The foreign individuals who volunteer to file tax returns for the previous unpaid taxes before the end of June will make up for the unpaid taxes plus a penalty of 0．5?for late payment but no punishment will be imposed.
(2) In case the foreign individuals fail to pay the taxes in arrear, he or she shall be demanded for repayment of the unpaid, evaded, missed and cheated taxes in arrear plus a penalty for late payment.

5. This notice shall apply to the individuals from Hong Kong, Macao, Taiwanese and oversea Chinese.