Strategies for Repatriating Profit from China-Preview

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2 - CHINABRIEFING | June 2014
Introduction
Fertile Soil
(沃土)
Ye Qiqing (叶其青)
Chinese Painting, 80 x 89 cm
Wan Fung Art Gallery (云峰画苑 )
| | +86 21 6487 4072 * 107
Sabrina Zhang
National Tax Partner
Beijing Office
Dezan Shira & Associates
When setting up in China, foreign investors are often confronted with complex
tax compliance issues and licensing procedures, paying scant regard to one of
themost important parts of overall business planning: the effectivemaximization
and subsequent repatriation of profits.
China maintains a strictly regulated system of foreign exchange controls,
meaning funds flowing into and out of China are tightly regulated. Therefore,
for foreign companies with subsidiaries in China, repatriating cash from their
subsidiaries has always been an important and challenging issue. It is important
to incorporate a profit repatriation strategy into the set-up planning of a
subsidiary in China to ensure one’s ability to access the profits it earned.
In this issue of China Briefing, we guide you through the different channels for repatriating profits,
including via intercompany expenses (i.e., charging service fees and royalties to the Chinese subsidiary)
and loans. We also cover the requirements and procedures for repatriating dividends, as well as how to
take advantage of lowered tax rates under double tax avoidance treaties.
Kind regards,
For Reference
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Issue 145 • June 2014
This Month’s Cover Art