DT4940 - China: Underlying Tax

(1) Documents needed to support the underlying tax claim

Theaccounts of the company for the period in which the profits were earned out of which the dividend was paid and the income tax return showing the final liability to tax will be required by the Underlying Tax Group.

(2) Legal reserve

Relevant profits are reduced by transfers of 10% of net profit until the reserve reaches 50% of the company’s registered share capital.

(3) Transfer to funds

Relevant profits are reduced by transfers of 1% of net profit to the Staff Bonus and Welfare Fund and the Enterprise Expansion Fund.

(4) Spared taxes

Credit is available for spared taxes (see DT4910). A copy of the certificate granting tax spared status and the relevant page(s) of the company’s tax computation showing the spared tax will need to be sent to the Underlying Tax Group.