CHINA ANNOUNCED CHANGES IN WITHHOLDING TAXES.

The changes were in circulars issued by the State Administration of Taxation in November, but only available recently. China collects a 20% withholding tax on money leaving the country in the form of interest, rents or royalties. Dividends paid to foreign investors are normally exempted from withholding tax. Under the new policy, withholding taxes will be collected on interest as the interest accrues without waiting for the interest actually to be paid.

China also said it will collect withholding taxes in future on payments from Chinese customers to foreign companies for communications services like satellite, cable, and fiber optics transmissions. China regards the payments as Chinese-source income to the recipients. They are subject to withholding taxes as “rents.”