The State Taxation Administration ("STA") has recently issued the Administrative Measures for Entitlement to Treaty Benefits for Non-resident Taxpayers (the "Measures"), with effect from January 1, 2020.
The Measures are composed of general provisions, treaty applicability and tax filing, follow-up administration of tax authorities, and supplementary provisions. The Measures prescribe that, regarding entitlement to treaty benefits for non-resident taxpayers, a non-resident taxpayer shall make a self-judgment as to whether it is eligible for treaty benefits, and if yes, file an application voluntarily for such benefits and retain relevant materials for future reference. In case a non-resident taxpayer voluntarily claims the treaty benefits, as it believes it meets the conditions for enjoying treaty benefits and needs to enjoy them, it shall submit the Information Reporting Form for Entitlement to Treaty Benefits for Non-resident Taxpayers together with the application, and gather together and retain the materials specified in Article 7 of these Measures for future reference. Moreover, the Measures expressly state that where a non-resident taxpayer finds that it is not eligible to enjoy but has already enjoyed the treaty benefits, which results in fewer or no tax payments, it shall voluntarily file tax returns with the competent tax authority and pay the tax arrears. Competent tax authorities shall establish credit records for those non-resident taxpayers that enjoy treat benefits in an inappropriate manner, and take follow-up administrative measures accordingly.