Managing Your Profits in China Through Service Fee and Royalty Contracts

Presenter(s):

• 

  Ines Liu

  Senior Manager, International Business Advisory
  

China maintains a strict system of foreign exchange controls, meaning funds flowing into and out of the country are tightly regulated. Other laws and regulations – such as the Company Law, relevant tax regulations, and China’s transfer pricing rules, as well as local practices impose additional barriers to foreign companies.

For the process of outbound payments from China to overseas, there are specific compliance requirements and key considerations for each channel. This webinar focuses on payments through service fee contracts and royalty contracts.  

Prepared correctly, a company’s service fee contract and royalty contract can substantially increase their likelihood of success and help them to avoid corresponding risks.

In this webinar, Ines discusses what foreign companies need to consider carefully before forming a service fee contract and royalty contract, including:

• Tax liabilities imposed on foreign companies
• How to avoid unexpected tax burden in China
• Potential Permanent Establishment (PE) risks 
• How Double Tax Treaties affect transactions
• How Transfer Pricing management affects related party transactions (RPTs)
• Additional reporting requirements and liabilities for foreign companies when filling for withholding tax (WHT)