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2015 was a watershed year with remarkable tax developments around the globe as well as in China. Globally, most of the governments were dealing with revenue pressures while exerting some efforts in counteracting tax avoidance schemes adopted by multinational enterprises (MNEs). In the wake of the final reports for the Base Erosion and Profit Shifting (BEPS) project jointly issued by the G20 and OECD, most of the tax authorities across the world started undergoing enormous changes on tax regulations and administration in the post-BEPS era.

 

In 2015, we have witnessed that China, like many other jurisdictions, has already taken actions to localise some of the BEPS recommendations. On top of China's agenda is incorporating the BEPS recommendations in the amendment of the Implementation Measures of Special Tax Adjustments. Besides, China even went farther by improving her tax rules on offshore indirect equity transfers and clarifying her positions on intra-group outbound payments, all with the focus on the alignment of tax and substance which is surrounding the essence of the BEPS project. In addition, without attracting too much publicity, treaty-related BEPS recommendations have actually been taken into a few new tax treaties.

 

Domestically, China was facing headwinds in 2015 as her economic growth was slowing down and trade going sluggish. In order to achieve a stable and sound economic growth under the 'New Normal', a combination of proactive initiatives were put forth in China's 2015 Government Report. Accordingly, China's Ministry of Finance (MoF) and State Administration of Taxation (SAT) followed suit to issue a series of tax measures to support these initiatives from a tax perspective.

 

At the beginning of 2016, PwC National Tax Policy Services Team is pleased to present this ‘Evolving tax landscape’ in China. This article reviews key developments in China tax policies and administration in 2015 and the challenges and opportunities they create for MNEs, aiming to help you achieve your business goals within an ever-changing tax environment. We conclude by a brief outlook for 2016.

 

china_tax_review_2015.pdf

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