On May 19, 2017, the State Administration of Taxation of China, the Ministry of Finance, the Central Bank, the Banking Regulatory Commission and the Insurance Regulatory Commission jointly issued a new deal to the outside world: "measures for the due diligence of tax-related Information on non-resident Financial accounts"
The new deal is closely related to the two documents already signed in 2014, the multilateral Convention on tax Collection and Mutual Assistance, and the automatic Exchange of Information Agreement on multilateral Financial accounts.
Now the three together have a great impact on international students, overseas Chinese!
International students
Before the introduction of the new deal, domestic parents transfer money to you, regardless of the amount of remittance, at most foreign banks ask, at most, you are required to show your parents income certificate.
After the new deal, your parents send you every sum of money, foreign banks must (mandatory) transfer remittance information directly to the relevant tax authorities in China. And then there might be something different.
In the case of overseas Chinese, they refer to Chinese passports with Chinese nationality but long-term residence abroad. This group of people is probably the worst, because there is a great possibility. Will be judged by policy as "tax residents" of both countries, namely:
Double tax residents in line with policy: double tax residents will have to open bank accounts to both countries and become fully "transparent"
For example: I am a Chinese native of Zhejiang Province. I went to Spain 15 years ago to work together and now I have a long-term Spanish resident Chinese passport. I bought some industries in our country, and I also have a small company, which is responsible for the scheduling of funds.
Before the new deal: the Spanish government will not get my assets in China.
After the new deal: the flow of funds in my domestic bank account will automatically be sent to the Spanish Inland Revenue Authority. The Spanish Inland Revenue Authority may have come to me and asked: Oh, we see you have 20 weeks more in your Chinese account.
1. Did the money come back from Spain?
Is it legal to leave the country?
Is this money legally taxed in Spain?
Could you show me the invoice?
……
At the same time, all my bank accounts in Spain will also be automatically transferred to the tax Administration of China, and every bank account will be completely "hidden". All the company accounts in my name, too!
There's another huge risk hidden in it, in Italy, for example.
Italy is a requirement: all Italian tax residents declare their overseas assets and tax in accordance with the law, for example: you are an Italian resident Chinese passport, and you have just sold a house at home, such as 1,000W RMB. Then your domestic bank account is 1, 000 ws. more.
Before the new deal: the Italian government can't find this 1000w at all;
After the New deal: your Bank of China account extra 1, 000 W will automatically be reported to the Italian Inland Revenue Authority, which will immediately verify your overseas assets declaration, if you declare the 1, 000 W overseas assets yourself. And pay taxes according to law. Okay, no problem. However, if you do not declare, do not pay taxes, then sorry, will start the legal process, freeze your 1000W funds in China, investigate and collect evidence, and then punish!
What's the penalty? It is said that the general amount of fine is said to be higher than the amount of property …
What does it mean? That is, it is found that there are 1000 weeks of understatement on your domestic account. The fine could be 1200 ws. you're all gone, and you owe the IRS 200w.
Measures for the due diligence of tax-related Information in non-resident Financial accounts
Implementation begins on July 1. In September 2018, China will exchange information for the first time.