Meaning
Tax administrative regulation establishes the procedures and filing requirements for Chinese companies making outbound payments for service fees, royalties, or dividends exceeding fifty thousand dollars. Under the provisions of sta bulletin 2013 no 56, any domestic entity wishing to remit foreign currency abroad must complete a tax registration before the local bank can release the funds. This administrative requirement stops applying to payments that fall below the designated monetary threshold or to trade-in-goods transactions which are governed by standard customs documentation.
Filing Threshold
Commercial banks act as the primary gatekeepers for cross-border currency transfers by verifying tax registration certificates before executing transactions. Compliance with sta bulletin 2013 no 56 is mandatory for outbound service remittances, including licensing fees and technical support charges. This threshold ensures that the tax bureau can audit the transaction for potential tax evasion before the money leaves the country.
Remittance Procedure
Domestic entities must submit a tax filing through the electronic tax bureau or at the local tax office to obtain the required dual-party filing form. For overseas companies expecting payment, the implementation of sta bulletin 2013 no 56 means that delays in fund receipt are common while the tax status of the transaction is assessed. This procedure allows the local authorities to determine whether withholding tax must be deducted from the payment.
Compliance Duty
Foreign contracting parties must cooperate with their Chinese customers by providing proof of tax residency and the underlying commercial contracts to ensure smooth processing. When a domestic company fails to comply with sta bulletin 2013 no 56, the bank will refuse to process the currency exchange, which can lead to breach-of-contract claims and supply chain disruptions. Western software developers or consultants must structure their payment terms to account for these regulatory delays and ensure that all withholding tax responsibilities are clearly allocated in the service agreement.
This careful planning prevents unexpected tax liabilities and ensures that the net amount received matches the agreed contract price.
