China’s tax authorities to begin financial data collection on foreign residents from January
Days of underpaying taxes to end soon as China takes part in worldwide scheme on swapping information on foreign residents’ financial assets
The mainland tax agency wants to collect the financial information of non residents who live in China as it takes part in a multilateral scheme to crack down on tax shelters.
By exchanging information with other countries, China will be able to levy taxes on Chinese nationals’ overseas financial assets, which means the days of not paying tax on foreign assets will soon end.
The State Administration of Taxation released a draft plan on October 14, in which financial institutions will be required to perform due diligence on financial accounts of foreign residents in tax matters according to Common Reporting Standard released by the Organisation for Economic Co-operation and Development, aiming to help other nations protect their tax income.
The move comes after China signed a multilateral agreement in December last year, which provides a mechanism to facilitate the automatic exchange of information in tax matters with other participating countries.
Currently, 104 countries and regions have signed the agreement.