Meeting with Director-General Mr. LUO Tianshu, Income Tax Department, State Tax Administration (STA)
2019-08-20 | Beijing
On 20th August, Director General LUO Tianshu (DG Luo) of the Income Tax Department, State Taxation Administration (STA), led a delegation to the European Chamber Beijing office. DG Luo provided the official response to an advocacy letter jointly drafted by the Finance and Taxation Working Group (F&T WG) and the Human Resources Working Group on the cancellation of foreign assignees’ non-taxable benefits, which are regulated in the latest Caishui [2018] No. 164.
Christian Koenig, Vice Chair, and Vivian Zhou, Senior Representative of the F&T WG, as well as Chamber Secretariat representatives Michelle Zhang and Tom Groot Haar, received the delegation. DG Luo said the STA attached high importance to the Chamber’s advocacy letter asking for reconsideration on the cancellation of non-taxable benefits for foreign assignees. However, according to DG Luo, the changes made through the latest Caishui [2018] No. 164 are necessary for moving towards an integrated taxation system. The underlying rationale behind the integrated taxation system is to no longer distinguish Chinese residents from foreign ones. The STA, nevertheless, understood and valued the concern of the European Chamber representatives that the amendment would potentially result in an additional tax burden on foreign assignees and foreign-invested enterprises (FIEs) with cross-border assignees in China. Therefore, the STA was considering possible adjustments and make-up measures, which would be implemented after the three-year transitional period (after 2022) currently stipulated in the law. Those additional measures, similar to some of the original foreign assignees’ benefits, would be added to the six individual income tax exemptions, issued in January 2019, that apply to all legal residents in China.
Along with DG Luo, representatives from Non-Resident Tax Administration Division, Income Tax Division I and Foreign Affairs Division of International Taxation Department also attended the meeting. Both sides agreed to introduce and establish a regular communication mechanism. Additionally, DG Luo was happy to offer official policy interpretations to European Chamber member, when further major policies were released in the future. The meeting was concluded with Mr. Koenig’s presentation of the European Chamber’s latest Business Confidence Survey 2019 to DG Luo.