On May 9, 2017, the State Administration of Taxation (“SAT”), the Ministry of Finance (“MOF”), the People’s Bank of China, China’s Banking Regulatory Commission, China’s Securities Regulatory Commission and China’s Insurance Regulatory Commission jointly released the final version of the Administrative Measures on due diligence procedures for non-residents’ financial accounts information on tax matters (“the Measures”).

The following amendments have been made to the draft for public discussion, as analyzed in our February Legal Flash,1 with no changes regarding any other issues:

The effective date of the Measures has been postponed to July 1, 2017. This is also the new cut-off date to classify existing accounts and new accounts for review purposes.

The threshold to qualify as a high-net-worth individual account is now USD 1 million.

For an entity account to be exempt from due diligence procedures, the threshold is now USD 250,000, considering the aggregated account balance in a same financial entity by all related parties.

Summary of due diligence obligations:

Type of account

Description

Due diligence procedure

Review timetable

Individual

New

Opened from July 1, 2017

Tax resident statement + reasonableness review

From July 1, 2017

Existing

Low net worth

Accumulated balance 4 USD 1 million on

June 30, 2017

Search retained data

Completed by December 31, 2018

High net worth

Accumulated balance > USD 1 million on

June 30, 2017

Search retained data + consult account manager

Completed by December 31, 2017

Entity

New

Opened from July 1, 2017

Tax resident statement + reasonableness review

From July 1, 2017

Existing

Small amount

Accumulated balance 4 USD 250,000 on June 30, 2017

Exempt

Others

Accumulated balance > USD 250,000 on June 30, 2017

Search retained data + tax resident statement for certain accounts

Completed by December 31, 2018

 

Date of issue: May 9, 2017. Effective date: July 1, 2017