INTERNATIONAL EXECUTIVE SERVICES. China. Planning Your International Transfer TAX

Transcription

1 INTERNATIONAL EXECUTIVE SERVICES Planning Your International Transfer TAX

2 : Planning Your International Transfer Coming to on Assignment 2 Entry Requirements 3 Living in 4 Investment in the 8 Exit and Re-Entry Requirements 9 Leaving after an Assignment 10 Leaving for an Assignment 11 Exit and Entry Requirements 12 Arrangements While You Are Overseas 13 Coming Home to 15 KPMG in 16 Consular/Embassy Information 17 Planning Your International Transfer 1

3 Coming to on Assignment Introduction This section is designed for individuals who are transferring to People s Republic of (PRC). It presents a general outline of the practical matters, which employers and employees should consider with respect to an international assignment. This publication serves as a companion to our main publication, Taxation of International Executives, which, if available, covers general taxation information for PRC. KPMG member firms offer a full range of services to international executives being transferred between countries. This document was designed to help assist the international executive settle into PRC as quickly and effortlessly as possible. Please note that the information herein provides only a general guide to the issues to be considered when transferring to PRC. Please seek professional advice in the light of your own personal circumstances. Planning Your International Transfer 2

4 Entry Requirements Entering PRC Foreign visitors to the PRC generally require visas. These are issued by the PRC embassies and consulates in most countries throughout the world. Foreign visitors may travel freely within the PRC. In some of the more remote cities and special locations, supplementary authorizations may be required from the Public Security Bureau. Visas are normally for a single entry or a double entry and for a period of one month's stay. Multiple-entry visas for up to 12 months may be issued at the discretion of the authorities. Foreign nationals wishing to take up employment in need to apply for employment visas. Upon arrival in, foreign nationals should also apply to the Public Security Bureau for residence permits and will need evidence of sponsorship from their employing organizations in the PRC. Foreign Exchange Regulations has foreign exchange control regulations. Chinese currency is not readily convertible. Annual quota management is implemented for individual settlement and purchase of foreign exchange within. The annual quota is USD 50,000 equivalent per person. Individual foreign currency settlement and purchase under this annual quota may be handled directly with the bank by providing a valid identification certificate. The tax authorities issued further notice that effective 1 January 2009, certain repatriation of select income in excess of USD 30,000 should be substantiated by a Tax Certificate issued by the local tax bureau. In the event that the settlement of foreign exchange of a foreigner exceeds the annual quota, supporting documents should be provided for the settlement. The following foreign exchange may be able to be remitted out by a foreigner by presenting valid identification certificate and relevant evidence with the bank: Foreign exchange purchased by using legal RMB income derived by foreigner from Unused foreign exchange previously remitted from outside Planning Your International Transfer 3

5 Living in The major cities in are not unlike others in Asia with airports, roads and hotels of international standards. Broadband connections are easily available in most international standard hotels. Mobile phones can roam easily if they are on the GSM system. Overseas visitors and those taking up employment in the PRC are unlikely to experience any difficulties in the PRC s major cities. However, in the less developed areas, conditions are different and this should be taken into account. Currency The official currency is the Renminbi (RMB) which is issued by the People's Bank of (PBOC). The RMB is in units of fen, jiao, and yuan. 10 fen =1 jiao 10 jiao =1 yuan In general, references to units of RMB indicate units of yuan unless otherwise stated. RMB is not a freely convertible currency and there is a limit on the amount of currency which may be carried in and out of the PRC. The PBOC announces daily exchange rates between the RMB and other major foreign currencies. Starting from 21 July 2005, the RMB will no longer be pegged to the U.S. dollar, and the rate will be made in reference to a basket of currencies. Foreign travelers may obtain RMB within the PRC at banks and authorized money changers and, if not used, a limited amount of that originally purchased can be converted back to foreign currency when leaving the PRC. Major credit cards are accepted at an increasing number of hotels, restaurants, and shops in major cities and cash advances against credit cards are also possible in some cases. However, overseas visitors should note that credit cards are not as widely used or accepted in the PRC as in other countries and suitable alternatives, such as travelers checks should be considered. Office and Retail Hours Office hours are generally Monday to Friday from 8:30 a.m. until 5:30 p.m. Shops are generally opened daily from 10:30 a.m. to 9:00 p.m. Bank Accounts Currently, government opened RMB business to foreign invested banks in. There are many domestic and foreign banks provide personal and corporate banking facilities for expatriates in. To open a current or savings account, foreigner usually just needs to complete an application form with signature, show his/her passport as identification, and make the appropriate deposit (varies depending on bank and type of account). Planning Your International Transfer 4

6 Twenty-four hours notice may be required to withdraw certain amount of cash from a bank. Not all branches of a bank can provide foreign currency withdrawal services. There is a wide network of ATMs throughout 's main cities. Banking hours are usually from 9:00 a.m. to 4:00 p.m. or 5:00 p.m. on Mondays to Fridays, but some close for an hour from 12:00 p.m. to 1:00 p.m. Health Services Medical and hospital facilities are adequate. Increasingly there are many joint ventures with foreign investors to provide international standards of health care. However, medical services by these joint ventures tend to be relatively expensive. Visitors may consider precautionary vaccinations if their itineraries include the more remote locations. It is not advisable to drink tap water. Western medicine is available in major cities but not as widely available as in western countries. Visitors with medical problems are advised to carry sufficient supply of medication with them for the period of their stay. Driver s License Foreigners can obtain a license by taking the relevant driving, medical and reflexes tests. Foreign driver s license can be converted but likely to require taking of medical and reflexes tests. Requirements vary from city to city. Most foreigners do not drive in as most rented cars are chauffeured. Taxis are usually available and inexpensive. This is the most common mode of transportation for foreigners. The major cities are also served by subways and buses. Motoring Associations Information not available. Education There are a number of international schools in the main cities of. Some schools are run specifically for the education of particular nationalities while others take all nationalities. However, the cost of an international school education tends to be relatively expensive. Currently, foreigners are allowed to send their children to local Chinese schools. In the main cities some of these have sections of the school allocated specifically to foreigners. However, few foreigners take up this option. Transportation has a modern highway system which allows relatively fast travel between the main cities. Traffic drives on the right in mainland. Buses are gradually becoming a popular form of transport between cities and fares are usually cheaper than train fares. Rail is still the most popular form of public transport for Planning Your International Transfer 5

7 long-distance travel, and the network of train stations continues to expand. There are a number of state-owned airlines operating domestic routes, and airfares are falling. Numerous new airports have recently been constructed throughout the country. Within cities, for those who do not have their own driver, taxis and undergrounds are relatively cheap forms of travel. Taxis can also be hired for travel between cities. In most main cities, there is a modern underground system which provides a form of convenient transportation. Public Holidays Official public holidays are the first day of January, first day of May, and first three days of October. There is also the three-day Spring Festival, often referred to as the Chinese New Year, which changes annually as they are based on the lunar calendar. Visitors should note that these three days of public holidays for Spring Festival and October days usually last for seven days continuously as the weekends before and/or after are declared to be normal working days to make up for the extended holidays. Other holidays include Qingming Day, Duanwu Day, and mid-autumn days. Housing There is a wide range of accommodation available for foreigners to rent or buy in the major cities. Rentals vary depending on the type of property. Leading hotels in all major PRC cities offer long-stay accommodation arrangements for overseas visitors. In addition, many of these hotels are located in complexes which provide serviced apartments and shopping and entertainment facilities. Recreation Most leading hotels and residential centers in the major cities offer sports facilities such as health clubs, tennis and squash courts, jogging tracks, and swimming pools. There are also a number of golf courses located in and near the major cities, many of which can be used by paying a green fee. is rich in cultural heritage and has many places which are of interest to overseas visitors. It also has a number of scenic hotel resorts. The leading hotels and travel companies are well equipped to make arrangements for overseas visitors according to their interests. Eating out is a popular pastime and Chinese cuisine offers a rich variety of styles and regional dishes. Additionally, the major cities offer a number of restaurants serving Western menus of the highest international standard. Shopping is equally popular as visitors are able to make purchases from the factory of the world at a fraction of the price in developed countries. Planning Your International Transfer 6

8 Some Useful Tips for Visitors It is essential to carry business cards printed in both Chinese and English as these are handed out on all business occasions. These cards should be presented and received with both hands, which is a sign of respect in Chinese custom. Courtesy and good manners are appreciated by the Chinese and are fundamental in business discussions and negotiations. Additionally, patience is a great asset in dealing with life in the PRC. Rudeness and signs of frustration will not get things done any quicker; they may have the opposite effect. English and other foreign languages are not widely understood, even in the major cities. It is, therefore, always useful to arrange for the place that you wish to visit to be written down for you in Chinese so that you can show this to, for example, a taxi driver. Most hotels have a readily available stock of cards printed in Chinese indicating the name of the hotel and its address. Western business dress is usual in working life and for business functions while smart casual, conservative style clothing is required for social occasions. Temperatures vary considerably from season to season and throughout the country. It is advisable to check what the weather will be like during your trip and to plan your wardrobe accordingly. Finally, visitors to the PRC should, in accordance with the customs regulation, declare precious metals, jewelry, and other valuable items at the customs point on arrival. If these are not declared on arrival, there could be problems in taking them out of the country on departure. Planning Your International Transfer 7

9 Investment in the There are some restrictions on foreigner nationals investing in the PRC. Investment in business ventures can be undertaken but certain rules must be complied with. Planning Your International Transfer 8

10 Exit and Re-Entry Requirements Exit and Re-Entry Requirements When leaving for business trips or vacations, you should ensure that you and your family members have a current re-entry visa (if required) and a current passport from your home country, which is valid through the end of your expected stay in. Foreigners on assignment to need to apply for a residence permit with the local public security bureau. With a valid residence permit, a foreign national usually does not need to obtain a re-entry visa when leaving. Usually, the length of residences permit will be the same as the length of his/her work permit and may need to be renewed once a year. Planning Your International Transfer 9

11 Leaving after an Assignment Before leaving after an assignment, you should ensure that all taxes have been duly settled with the relevant tax authorities during your assignment. You may also need to perform a tax deregistration with the relevant tax authorities and deregister your work permit and residence permit with the relevant authorities. Planning Your International Transfer 10

12 Leaving for an Assignment Introduction This section is designed to help people who are being posted from PRC (the home country) to work in another country (the host country). It aims to give you a general outline of the practical matters which you and your employer should consider in regard to your posting. Please note that the information herein provides only a general guide to the issues to be considered when transferring abroad. Please seek professional advice in the light of your personal circumstances. Planning Your International Transfer 11

13 Exit and Entry Requirements Passport Before leaving PRC you should ensure that you have a current passport that is valid until the end of your expected foreign stay. This will avoid the problem of trying to obtain a new passport while overseas. Special Circumstances for Certain Host Countries For some countries, you will also require a visa or other form of entry permit. The consulate of the relevant country will be able to supply you with details of the procedure for obtaining a visa or other permit. Planning Your International Transfer 12

14 Arrangements While You Are Overseas Home/House If your home is subject to a mortgage from a bank or other financial institution, you will need to make arrangements to have repayments made while you are away. Personal Mail Before leaving PRC, you should make arrangements to have all mail forwarded to an alternative address. Power of Attorney You may wish to give a friend or relative or your solicitor a power of attorney to sign documents, etc. on your behalf while you are away. Will It is advisable to make a will if you have not already done so. Medical Coverage You should arrange a medical examination for you and your family well before departure. Absence from the home country for a period of time may result in loss of coverage. You should check on the benefits offered in relation to overseas services by any private health cover you may already have. You are strongly advised to ensure you arrange appropriate cover in your destination country, including evacuation insurance for under developed countries, as medical costs are significant in many overseas countries. Driver s License You should check whether your PRC driving license would be valid in the host country. If not, you will need to find out what the requirements are for obtaining a local license. Education If your children are accompanying you overseas, you will need to make arrangements to have them enrolled at an appropriate school. There are international schools at most major international centers. Banking Before you travel, you should check whether your bank has branches or affiliates in the host country, and whether any changes are necessary to your banking arrangements in order to give you local access to your funds. Investments If you become a non-resident you should notify your bank, investment institutions, and the appropriate share registries in respect of shares you have in PRC companies, the date from which you become a non-resident. The institution will then be aware of any Planning Your International Transfer 13

15 special steps that need to be made on your behalf. In this regard, sample letters can be provided at your request. Share Options You should take specific advice regarding participation in any employee share or share option plans, as your leaving PRC could present tax-planning opportunities. Insurance Policies If your home is let while you are away, you should notify your insurer that the property is no longer owner-occupied. You can continue to pay premiums to your life insurance company in respect of your life assurance policy; however, you should notify the company and ascertain whether you will be covered by the policy while you are overseas. Pension Arrangements This is another area in which it is very important to seek specific advice. Depending on your situation, it may be critical that you seek specific advice prior to leaving PRC. You should check any tax liabilities that may arise in the foreign country in respect to contributions that are continuing to be made into a PRC fund and earnings in respect of this fund while you are overseas. You should also check whether your assignment would affect any entitlements you may already have accrued. Planning Your International Transfer 14

16 Coming Home to Chinese nationals are subject to PRC individual income tax on their worldwide income regardless of where they live or work, until the time they renounce their PRC citizenship. Therefore, Chinese nationals should report and settle their overseas income derived during their overseas assignments to the relevant PRC tax authorities. The overseas taxes paid can be offset their tax payable on the relevant incomes. The foreign tax credit is limited to the PRC tax on the individual's foreign source income. For Chinese nationals, who obtained other country's permanent residence permit, may be required to apply for a special work permit for working in. Planning Your International Transfer 15

17 KPMG in Shanghai Dawn Foo KPMG Huazhen 50th Floor, Plaza Nanjing West Road Shanghai Tel. +86 (21) Fax +86 (21) Planning Your International Transfer 16

18 Consular/Embassy Information Australia Embassy of Australia, No. 21 Dongzhimenwai Dajie Tel. +86 (10) Fax +86 (10) Web site: Belgium Belgian Embassy, No. 6, San Li Tun Road Tel. +86 (10) or +86 (10) Fax +86 (10) Web site: Brazil Embassy of Brazil, No. 27 Guanghua Road - Chaoyang District Tel. +86(010) Fax +86(010) Web site: Planning Your International Transfer 17

19 Canada Canadian Embassy, No. 19 Dongzhimenwai Dajie, Chao Yang District Tel. +86(010) Fax +86(010) Web site: geo.international.gc.ca/asia/china France Embassy of France, No. 3 Sanlitun Dongsanjie, Chaoyang District Tel. +86(010) Web site: Germany Embassy of Germany, No. 17 Dongzhimenwai Dajie, Chaoyang District, Tel. +86(010) Fax +86(010) embassy@peki.diplo.de and visa@peki.diplo.de Web site: Japan Embassy of Japan, No.7, Ri Tan Road, Jian Guo Men Wai Tel. +86(010) Fax +86(010) Web site: Planning Your International Transfer 18

20 Netherlands Embassy of Netherlands, No.4, Liang Ma He Nan Road Tel. +86(010) Fax +86(010) Web site: Singapore Embassy of Singapore, No. 1 Xiu Shui Bei Jie, Jian Guo Men Wai, Chaoyang District Tel. +86(010) Fax +86(010) singemb_bej@sgmfa.gov.sg Web site: South Africa Embassy of South Africa, 5 Dongzhimenwai Dajie Tel. +86(010) Fax +86(010) safrican@163bj.com Switzerland Embassy of Switzerland Sanlitun Dongwujie 3 Tel. +86(010) /37/38 Fax +86(010) Web site: Planning Your International Transfer 19

21 United Kingdom Embassy of United Kingdom Floor 21, North Tower, Kerry Centre 1 Guang hua Road Tel. +86(010) Fax +86(010) consularmailbeijing@fco.gov.uk Web site: United States Embassy of United States No.3 Xiu Shui Bei Jie Tel. +86(010) Fax +86(010) Web site: beijing.usembassy-china.org.cn Planning Your International Transfer 20

22 kpmg.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation KPMG Huazhen, a joint venture and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. The material contained within draws on the experience of KPMG tax personnel and their knowledge of local tax law in each of the countries covered. While every effort has been made to provide information current at the date of publication, tax laws around the world change constantly. Accordingly, the material should be viewed only as a general guide and not be relied on without consulting your local KPMG tax adviser for the specific application of a country's tax rules to your own situation.