China has implemented an advance tax ruling system starting from 1 March 2012. This is an important development as it enables taxpayers to obtain certainty in advance on their tax positions.  

According to the Trial Guidelines, a competent tax authority may, upon request, issue an opinion to a taxpayer on how the tax laws, regulations and circulars should be interpreted and applied in the case at hand. The Trial Guidelines stipulate that a tax authority may not issue an opinion if:

  • the opinion concerns tax matters subject to permission or approval of the tax authorities;
  • the tax authority is not competent in respect of the relevant tax matter;
  • the opinion would be contrary to the rules of a higher authority; or
  • the opinion would be obviously unfair to other taxpayers in a similar situation.

A request for a tax opinion on a specific tax matter should be filed by the relevant taxpayer with the competent tax authority, i.e. the tax office in charge of the taxpayer's tax affairs, and the Trial Guidelines provide detailed procedures for issuing the opinions. Within 30 days after the tax opinion has been issued, it will be made publicly available by the tax authority. However, the Trial Guidelines do not specify whether the name of the applicant will be made publicly available and, more importantly, whether the tax authorities and the taxpayer are bound by the opinion.

Although the Trial Guidelines are considered a big step forward, it is expected that issues will arise in the actual procedure for obtaining a tax opinion. The State Administration of Taxation is therefore expected to issue supplemental rules and guidance in the future.