China’s New Circular Eases Taxpayer Relocation

China’s State Taxation Administration has introduced a new circular aimed at streamlining taxpayer relocation, effective from September 1, 2024. The measures include proactive guidance, simplified procedures, and enhanced post-relocation services to improve administrative efficiency and foster a unified national market.

On August 15, 2024, the State Taxation Administration (STA) issued a new circular, titled Circular on Further Facilitating Cross-Province Relocation of Taxpayers and Serving the Construction of a Unified National Market (hereinafter, the “new circular”) aimed at streamlining the process for relocation of taxpayers across China. The new circular introduces a series of measures designed to optimize the relocation process, from initial reminders to post-relocation services.

Set to take effect on September 1, 2024, the measures introduced in the new circular align with the STA’s broader goal of enhancing administrative efficiency and supporting the development of a unified national market.

Taxpayer relocation has long been a complex process for businesses, characterized by varying tax regulations, ambiguous administrative procedures, and stringent local compliance requirements.

In this article, we introduce the details of the STA’s new circular, examining how its measures aim to facilitate smoother taxpayer relocations and contribute to a more integrated and efficient national market.

Key measures introduced by the new circular

The STA has introduced targeted measures to simplify and expedite the relocation process for taxpayers. These initiatives are designed to ensure a smoother, more efficient relocation experience, addressing every stage from initial preparation to post-relocation support.

Proactive guidance and reminders

Find Business Support

Build Your Asia Business with Turnkey Market Entry and Cross-Regional Support

Tax authorities will work closely with market regulation departments to monitor address changes. When a taxpayer plans to relocate, tax authorities will proactively send clear guidance on the necessary tax procedures. This includes reminders to resolve any outstanding tax matters before the move. Tax officials will also receive alerts to ensure these matters are addressed within a specific timeframe.

Faster and simpler relocation procedures

To speed up the relocation process, the STA has introduced the following four key measures:

• Resolving tax issues: Taxpayers with unresolved tax matters can choose to either continue processing these issues or terminate them. If they opt to proceed, tax authorities must resolve the matters quickly. If they choose to discontinue, the issues will be closed immediately. Any tasks initiated by the tax authorities must also be completed within the prescribed time.
• Simplifying invoice management: For taxpayers using fully digitalized e-fapiao, their fapiao quotas will automatically transfer to their new location. Those using tax control devices can update their information online if relocating within the same province, without needing to return the devices. In cross-province relocations, taxpayers can cancel their devices remotely and apply for new ones at their new location, or opt to use fully digitalized e-fapiao solutions.
• Risk-based handling of relocations: Taxpayers who have outstanding risk tasks will have their relocation procedures promptly handled by the tax authorities for low-risk cases. The risk tasks will be forwarded to the tax authorities in the destination area for further processing. For medium and high-risk cases, the tax authorities will complete risk responses within the specified time limits and promptly handle the relocation procedures.
• Streamlining tax refunds: If taxpayers have overpaid taxes, the information system will automatically remind them to apply for a refund. For those who choose to apply for a refund before relocation, the tax authorities should process it within the specified time. For those who choose not to claim a refund immediately, the tax authorities will guide them in handling the refund after relocation.

Improved post-relocation services

In terms of ‘improving post-relocation services,’ the notice explicitly states the need for continuous tracking and guidance. The tax authorities in the destination area are required to provide a ‘one-stop’ relocation service, ensuring that taxpayers’ rights and qualifications related to tax credit level, invoice quotas, prepayments, income tax loss offset, general VAT taxpayer status, and unused input VAT credits are maintained.

Additionally, timely assistance should be provided to taxpayers in handling any outstanding tax-related matters before relocation.

Implications of the new circular

Find Business Support

Manage Company Tax and Compliance across Multiple Jurisdictions. Speak With Our Tax Professionals on the Ground.

The new measures introduced by the STA mark a significant advance in enhancing administrative efficiency. By streamlining the taxpayer relocation process, the STA aims to simplify procedural hurdles, ensuring that businesses can operate smoothly across different locations. For taxpayers, the process will be more predictable and manageable, minimizing disruptions during relocations.

These changes are expected to have a broad impact. The reduction in bureaucratic friction is crucial for facilitating the free flow of resources and business activities throughout the country. This will further improve China’s business environment, enhance investor’s confidence, and contribute to the development of the unified national market.

• Previous Article A Guide to Minimum Wages in China (As of August 27, 2024)
• Next Article