Local Tax Bureau Cracking Down on Foreign Companies

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SHANGHAI, Jul. 16 – Dezan Shira & Associates clients across the country are reporting a recent spate of unannounced visits to their premises by local tax bureau officials demanding to inspect books and inquiring about salary levels.

In most instances, this has been followed by requests for additional tax payments, questions about expatriate staff salary levels and reports of harassment made through multiple visits designed to pressure foreign businesses into producing more taxable income.

Expatriate salaries are being questioned and on occasion being asked to  register a higher salary bracket to produce increase income tax payments. In some cases, businesses that have been wrongly advised by officials on taxes due during company turnover are now being required to pay additional taxes as a consequence.

Businesses facing such investigations are advised to seek professional advice on the correct tax level and to resist any bullying if the accounts are in fact in order.

The tactics may be a concerted effort to raise taxes in the light of plunging income tax revenues from China’s domestic exporters as well as to help pay for the massive RMB4 trillion stimulus plan. It is likely that this campaign will increase in the coming months.

Businesses unsure about tax levels and correct filing and declaration procedures may email tax@dezshira.com or contact their nearest local Dezan Shira office located here.