The new PRC Corporate Income Tax (“CIT”) Law which took effect from January 1, 2008 introduced the concept of Tax Resident Enterprise (“TRE”). Enterprises with their effective management located in China (whether established in accordance with the laws of China or of foreign jurisdictions) are regarded as Chinese TREs and subject to PRC CIT on their worldwide income.

In April 2009, the State Administration of Tax (“SAT”) released Circular Guoshuifa [2009] No.82 clarifying how to determine whether a Chinese-capital controlled foreign company (“CCCFC”) is a Chinese TRE. However, Circular 82 only provided a general guideline of the CIT treatment such CCCFCs would be subject to and the application procedures they should follow for Chinese TRE status. In practice, how such entities (know as overseas registered Chinese-capital controlled tax resident, or “Deemed Overseas TREs” in short) fulfi l their tax fi ling obligations and calculate their tax liability was not clarifi ed. With the aim of standardising the tax administration for Deemed Overseas TREs, the SAT released the Administrative Measures for Overseas Registered Chinese-capital Controlled TREs (Trial) on July 27, 2011.

The Measures, effective from September 1, 2011, cover the major tax matters concerning Deemed Overseas TREs including application procedures for TRE status, documentation requirements, CIT treatments, administration and collection matters and application of double tax treaty provisions.