Under the new policy, with effect from 1 January 2010, all representative bodies should, at the end of each quarter, within 15 days, truthfully declare to the competent tax authorities to pay corporate income tax, sales tax, and in accordance with the "Provisional Regulations on VAT" and its implementation, truthfully declare to the competent tax authorities to pay VAT within the tax deadlines that the Articles provide.
Firstly, the representative office shall, since obtaining the business registration documents (or relevant authority), within 30 days, holds the copy of the business license to the competent authorities together with the original, other copy documents and other relevant information to the local competent tax authorities for tax registration. According to the law, declare and pay enterprise income tax on the amount of its taxable income as declared by law and pay sales tax and VAT.
Secondly, regardless of whether the tax treaty treatment, if it is in accordance with the relevant provisions set out therein, the representative body books, according to legal and valid certificate bookkeeping, accurately accounting for revenues and costs, in the process of tax returns, should follow the new policy where the time limit requires that, at the end of the quarter, within 15 days from the date, honestly declare to the tax authorities to pay corporate income tax, sales tax. Since the annual corporate income tax should also be within 5 months after the end of year, to submit annual corporate income tax return and arrange final settlement, or to settle the payable tax refund from the tax authorities.
VAT tax specific the tax period by the competent tax authorities according to the magnitude of the tax payable by taxpayers: it does not pay taxes in fixed terms. It is based on transaction basis, on monthly or quarterly basis, payment for within 15 days from the date of expiry of tax returns; on the 1st, 3rd, 5th, the 10th or the 15th of a payment period. Within 5 days from the expiry of the said period for full payment in advance, on the 1st day of the coming month for settle the tax liability of the previous month tax returns within 15 days.
Thirdly, when there is changes in content of the representative office, i.e. the registration period expires, earlier termination of business activities, it should need to register the change or apply for de-registration. Representative bodies, during the process of de-registration, the tax should be liquidated. Its liquidation proceeds will be used to pay to the declared and withholding tax.
Noted by tax departments and its related parties, a representative office, during the process of de-registration, is required to go through the business sector by tax, banking, customs and other departments issued by the tax, debt and other related matters, which proves to be a relatively complex procedures and formalities, so many institutions, even if expire or earlier termination of business activity, are reluctant to apply for de-registration for avoiding taxes and debt repayment obligations.
For example, the Shenzhen Municipal Industry and Commerce Departments found that, in the expired period of representative office in 2327, the initiatives to apply for de-registration is only 163. Tax department reminds that there is a wide range of penalties if taking this risk, attention should be drawn by institutions, proactive behavior in the business or prior to the de-registration of registration authority for the disposal matters, compliance with statutory obligations.