Non-resident taxpayers’ access to the treatments and benefits established under China’s network of tax treaties was, to date, primarily governed by Circular Guo Shui Fa  No. 124 (“Circular 124”). 3
Circular 124 established two types of procedures: (i) pre-approval for tax treaty treatments and benefits relating to dividends, interests, royalties and capital gains; and (ii) filing for tax treaty treatments and benefits relating to other types of income.
In the context of reforming the government approval system, and following the State Council’s release of Guo Fa  No. 27 on May 14, 2015, the State Administration of Taxation (“SAT”) issued Announcement  No. 60 (“Announcement 60”) on August 27, 2015, to replace Circular 124 and update the rules on access to tax treaty treatments and benefits.
Announcement 60’s main highlights:
- Wider scope
Announcement 60 governs access to the treatments and benefits under tax treaties and, as a new feature, international transportation treaties.
- Abolishment of approval procedures
Announcement 60 eliminates the approval procedure to access tax treaty treatments and benefits for dividends, interests, royalties and capital gains. From the announcement’s effective date, non-resident taxpayers that fulfill the new filing procedures can enjoy the treaty benefits without any prior approval from the tax authorities.
- New filing procedures
Non-resident taxpayers that self-declare their taxes in China and consider themselves qualified to enjoy tax treaty treatments and benefits must submit the required documents to the tax authorities when making their tax declaration.
Non-resident taxpayers that pay their taxes in China through a withholding agent and consider themselves qualified to enjoy the tax treaty treatments and benefits must provide the required documents to the withholding agent. If the documents are complete and the information provided is correct, the withholding agent should apply the corresponding tax treaty treatments or benefits when withholding taxes and submit the relevant documents to the competent tax authorities.
Required documents include standard reporting forms, non-resident taxpayers’ tax residency certificates, contracts and shareholder’s resolutions, as well as answers to a number of questions on the eligibility to apply the tax treaty treatments and benefits (to prove beneficial ownership). To avoid repeated and excessive filing of documents, the tax authorities may approve exceptions to filing documents required for the same type of treaty treatments or benefits. Non-resident taxpayers, and not withholding agents, are ultimately responsible for the accuracy of the documents.
- Claim for tax refunds
Non-resident taxpayers that qualify for tax treaty treatments and benefits but do not apply them —therefore, overpaying their taxes— can file the necessary documents to claim a refund from the tax authorities within the statutory period provided under the Tax Collection and Administration Law (three years) plus bank deposit interest for the same period.
- Ex-post examination by the tax authorities
Besides eliminating the approval procedure, the tax authorities are called to strengthen their efforts in verifying the documents submitted by non-resident taxpayers to avoid tax treaty abuse and underpayment of Chinese taxes. To these effects, the tax authorities can request supplementary information during the 10- year statutory period provided under the General Anti Avoidance Rules.
Date of issue: August 27, 2015. Effective date: November 1, 2015.