China's New Business Income Tax

Shielding Non-China Income From the Expansive Enterprise Income Tax

Plus: The Impact of IRS Contract Manufacturing Regs for U.S. Operations in China

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Thursday, August 7, 2008

Course Materials

Description

While opportunities for U.S. companies in the China market have never been greater, the tax planning challenges for business are equally substantial.

As of Jan. 1, 2008, China enacted a 25% enterprise income tax, under which China has considerable flexibility to bring a foreign company's worldwide income into its tax base. Associated rules and circulars could negate U.S. companies' assumptions that its income is safe from Chinese tax.

Meanwhile, the IRS has proposed much-awaited revisions to its contract manufacturing regs, which are a leading vehicle for American businesses entering the Chinese marketplace. Tax counsel must prepare to leverage the new exceptions and other key changes.

Listen as our panel of experienced tax advisors bottom-lines these and other recent developments affecting tax on doing business in China, helping you prepare to adjust your tax planning and transfer pricing strategies.

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Outline

  1. New PRC Enterprise Income Tax (EIT)
    1. Effective Jan. 1, 2008
    2. Resident enterprises: Worldwide income taxable on net basis
      1. Place of incorporation
      2. Place of effective management
    3. Non-resident enterprises
      1. With an establishment (PE) in China; taxable on net basis
        1. China-sourced income
        2. Effectively connected income
      2. Without an establishment in China but with China-sourced income; taxable on gross basis
    4. Special tax adjustments
      1. Transfer pricing, cost-sharing and APA
      2. Thin capitalization
      3. CFC
      4. GAAR
    5. High tech-related incentives
    6. Branch tax filing
      1. Consolidated EIT returns for all branches
      2. Concerns on EIT flowing into locations of head offices
      3. EIT allocation among head offices and branches
  2. Opportunities For Foreign Companies To Restructure Chinese Operations On Tax-Free Basis
    1. State Administration of Taxation notice Guoshuifa (1997) 207 (Notice)
    2. Transferring interest in foreign investment enterprise at cost to another group company
    3. Will dividend-withholding tax exemption continue?
    4. Restructuring PRC investments through tax-haven holding companies
  3. Impact of Proposed New IRS Regs On Contract Manufacturing And Subpart F Income
    1. Application of manufacturing exception
    2. Application of branch rule to multi-branch manufacturing operations
    3. Extensive discussion of case study

Benefits

The panel will gives you the benefit of their experience and analysis on these and other top tax priorities:

  • Understanding crucial aspects of the enterprise income tax and the associated rules and circulars, so that your company can protect its income from taxation to the maximum possible.
  • Identifying tax opportunities and pitfalls in the Chinese marketplace offered by the proposed U.S. contract manufacturing regs.
  • Planning tax strategies to deal with anti-avoidance provisions and transfer pricing guidance from China.

Following speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Peng Tao
Peng Tao
Of Counsel
DLA Piper

His practice focuses on tax and transfer pricing issues in China. He formerly worked in the People's Republic of...  |  Read More

Alan Granwell
Alan Granwell
Partner
DLA Piper

He has been practicing in international taxation, and more specifically tax planning and controversies, for more than...  |  Read More

Melanie Chen
Melanie Chen
Managing Director for China Region Group
UHY Advisors

She specializes in cross-border transactions in China, Hong Kong and Taiwan and advises U.S. companies on complex tax...  |  Read More

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