Page 11 - The South China Business Journal
P. 11
August-September 2017
For regular business travelers,
this means a faster and smoother
experience when crossing the
border, where previously the or-
deal was much more taxing and
time consuming.
Chinese New Year and Oth- be considered when If the subsidiary requests per-
er Observed Holidays making a business trip to China. sonnel to come and direct their work, this
is not classed as permanent establishment.
Chinese New Year, also known as the Tax Liabilities
Spring Festival, is the biggest national However, permanent establishment will
holiday in the Chinese calendar. Its date For companies who regularly dispatch apply if the overseas company manages
is dictated by the lunar calendar, and so personnel to China, there may be some the dispatched employee’s work, deter-
falls between January 21 to February 20 tax liabilities incurred. mines how many people are sent, bears
depending on the year. the cost of the dispatched employee’s
This depends on whether the originat- salary, and/or obtains profit from the
During this period, most people journey ing entity dispatching employees to Chinese subsidiary for the assigned em-
back to their hometowns to be with their China already has a permanent estab- ployee’s activities. In this case, income
family: commerce shuts down and trans- lishment in China. Those which have a derived in China will also be taxed.
port is overwhelmed, making business trav- business venue or construction site in
el and arduous and expensive task. China, is represented in China by an Management Solutions
agent, dispatches personnel to China
Businesses can close up for anything to provide services, or renders services It is important for HR teams to prop-
from a couple of days to a week, and usu- to the local subsidiary count as perma- erly manage dispatched employees, so as
ally reopen on the eighth day of the holi- nent establishment. to not incur hidden tax liabilities, even
day. Though the streets may be empty though this is a tax issue. It is in the best
during the main holiday, the effects of In many cases, where a country has an interest of a company to make sure that
the holiday will be felt in the lead up as operational double taxation agreement dispatched employees’ activities are re-
well. Even when the holiday ends, not (DTA) with China, if a foreign employee garded as hailing from the subsidiary in
everyone immediately returns back to has not been dispatched to China within China, as opposed to that of the overseas
work, and the ease back into business as a standard of 183 days, it is not classed parent company. An HR department is in
normal will be slow. as having a permanent establishment. the best position to ensure this is so.
Flights will also be several times more ex- If permanent establishment is deter- On top of dealing with tax liabilities, HR
pensive than usual during this period, and mined under a DTA, a foreign entity teams should also brief employees trav-
trains fully booked months in advance. will be subject to tax on income deriving eling to China for business to make sure
from China. they are sufficiently prepared, and ensure
Business travel during the period is that all visa issues are correctly processed
therefore strongly discouraged. How- Where an entity has a subsidiary in Chi- in order to avoid complications upon ar-
ever, if a visit is imperative, due precau- na manned with staff, but sends person- rival to China. Given the importance of
tions should be made far in advance for nel on projects to China from abroad, these issues, HR teams should consider
travel and accommodation. salary and reimbursement of the dis- working with local partners when plan-
patched personnel will be taxed by the ning travel to China for thier personnel.
Other holidays, such as Tomb Sweeping Chinese tax authorities on the subsid-
Day, Dragon Boat Festival, Mid-Autumn iary in China.
Festival, and Golden Week, are also sub-
ject to irregular dates, and should also
9
For regular business travelers,
this means a faster and smoother
experience when crossing the
border, where previously the or-
deal was much more taxing and
time consuming.
Chinese New Year and Oth- be considered when If the subsidiary requests per-
er Observed Holidays making a business trip to China. sonnel to come and direct their work, this
is not classed as permanent establishment.
Chinese New Year, also known as the Tax Liabilities
Spring Festival, is the biggest national However, permanent establishment will
holiday in the Chinese calendar. Its date For companies who regularly dispatch apply if the overseas company manages
is dictated by the lunar calendar, and so personnel to China, there may be some the dispatched employee’s work, deter-
falls between January 21 to February 20 tax liabilities incurred. mines how many people are sent, bears
depending on the year. the cost of the dispatched employee’s
This depends on whether the originat- salary, and/or obtains profit from the
During this period, most people journey ing entity dispatching employees to Chinese subsidiary for the assigned em-
back to their hometowns to be with their China already has a permanent estab- ployee’s activities. In this case, income
family: commerce shuts down and trans- lishment in China. Those which have a derived in China will also be taxed.
port is overwhelmed, making business trav- business venue or construction site in
el and arduous and expensive task. China, is represented in China by an Management Solutions
agent, dispatches personnel to China
Businesses can close up for anything to provide services, or renders services It is important for HR teams to prop-
from a couple of days to a week, and usu- to the local subsidiary count as perma- erly manage dispatched employees, so as
ally reopen on the eighth day of the holi- nent establishment. to not incur hidden tax liabilities, even
day. Though the streets may be empty though this is a tax issue. It is in the best
during the main holiday, the effects of In many cases, where a country has an interest of a company to make sure that
the holiday will be felt in the lead up as operational double taxation agreement dispatched employees’ activities are re-
well. Even when the holiday ends, not (DTA) with China, if a foreign employee garded as hailing from the subsidiary in
everyone immediately returns back to has not been dispatched to China within China, as opposed to that of the overseas
work, and the ease back into business as a standard of 183 days, it is not classed parent company. An HR department is in
normal will be slow. as having a permanent establishment. the best position to ensure this is so.
Flights will also be several times more ex- If permanent establishment is deter- On top of dealing with tax liabilities, HR
pensive than usual during this period, and mined under a DTA, a foreign entity teams should also brief employees trav-
trains fully booked months in advance. will be subject to tax on income deriving eling to China for business to make sure
from China. they are sufficiently prepared, and ensure
Business travel during the period is that all visa issues are correctly processed
therefore strongly discouraged. How- Where an entity has a subsidiary in Chi- in order to avoid complications upon ar-
ever, if a visit is imperative, due precau- na manned with staff, but sends person- rival to China. Given the importance of
tions should be made far in advance for nel on projects to China from abroad, these issues, HR teams should consider
travel and accommodation. salary and reimbursement of the dis- working with local partners when plan-
patched personnel will be taxed by the ning travel to China for thier personnel.
Other holidays, such as Tomb Sweeping Chinese tax authorities on the subsid-
Day, Dragon Boat Festival, Mid-Autumn iary in China.
Festival, and Golden Week, are also sub-
ject to irregular dates, and should also
9
