Doing business in China can be a great opportunity for foreign companies, but with this opportunity comes the responsibility of meeting the country's tax requirements and deadlines.
Recently, China’s State Taxation Administration (STA) announced the 2023 Tax Filing and Payment Deadlines for taxpayers required to complete tax filing and payment within 15 business days upon the end of each month or quarter.
The tax system in China can seem complex at first, but with proper preparation, it's not as difficult as one might think. However, foreign companies operating in China should pay close attention to these deadlines to avoid late payment penalties and tax credit rating downgrading.
The deadline for filing and payment of taxes in months including February, March, June, August, September, November, and December is the 15th day of the month; while in January it was extended to January 16 (January 15 is Sunday), and in April it was extended to April 17 (April 15 is Saturday).
The deadline for filing and payment of taxes in May was extended to May 18, as there would be a three-day holiday from May 1 to May 3. In July it was extended to July 17 (July 15 is Saturday) and in October it was extended to October 23, because of a six-day holiday from October 1 to 6.
Local tax bureaus can adjust the tax filing and payment deadlines upon special situations. But such adjustments should be filed with the STA in advance.
The following is a list of the tax filing and payment deadlines for 2023:
January 16 (Monday)
February 15 (Wednesday)
March 15 (Wednesday)
April 17 (Monday)
May 18 (Thursday)
June 15 (Thursday)
July 17 (Monday)
August 15 (Tuesday)
September 15 (Friday)
October 23 (Monday)
November 15 (Wednesday)
December 15 (Friday)
The taxes that are subject to tax filing and payment deadlines within 15 business days upon the end of each month or quarter are the following:
Corporate income tax (CIT)
CIT is prepaid on a monthly or quarterly basis in accordance with the figures shown in the accounting books of the company. Companies are required to file CIT tax returns and prepay tax within 15 days from the end of the month or quarter.
Value-added tax (VAT)
The deadline for VAT payment can be every one day, three days, five days, 10 days, 15 days, one month, or one quarter. The specific tax payment deadline for a taxpayer is assessed by the tax authorities according to the taxpayer’s amount of tax payable. A taxpayer who is unable to make payments according to a fixed deadline may opt to pay tax for each transaction.
A taxpayer who opts for a tax payment period of one month or one quarter should file a tax return and make tax payments within 15 days from the date of expiry of the tax payment period. Meanwhile, a taxpayer who opts for the tax payment period of one day, three days, five days, 10 days, or 15 days should pre-pay tax within five days from the date of expiry of the tax payment period and file a tax return and make tax payments within 15 days from the first day of the following month as well as settle the tax amount payable for the preceding month.
Consumption tax (CT)
The deadline for payment of consumption tax shall be one day, three days, five days, 10 days, 15 days, one month or one quarter respectively. The specific tax payment deadlines for a taxpayer shall be assessed respectively by the tax authorities, according to the tax amount payable of the taxpayer. A taxpayer who is unable to pay tax by fixed deadlines may pay tax for each transaction.
A taxpayer who opts for a tax payment period of one month or one quarter shall file tax return and make tax payment within 15 days from the date of expiry of the tax payment period. A taxpayer who opts for the tax payment period of one day, three days, five days, 10 days or 15 days shall pre-pay tax within five days from the date of expiry of the tax payment period, and file tax return and make tax payment within 15 days from the first day of the following month as well as settle the tax amount payable for the preceding month fully.
Urban maintenance and construction tax (UMCT)
The tax obligation of UMCT (as well as the other two surtaxes—education surcharge and local education surcharge) occurs at the same time as the tax obligation of VAT and CT and is paid simultaneously with the VAT and CT respectively.
Individual income tax (IIT)
Taxpayers deriving income from business operations shall compute individual income tax on a yearly basis, file tax returns with the tax authorities within 15 days from the end of the month or quarter and pay tax in advance.
Where a taxpayer obtains taxable income but there is no withholding agent, he/she shall file tax returns with the tax authorities within the first 15 days of the following month after obtaining the income and pay tax.
A non-resident individual who derives income from wages and salaries from two or more sources in China shall declare and pay tax within the first 15 days of the following month after obtaining the income.
The tobacco tax shall be levied on a monthly basis, and the taxpayer shall file and pay the tax within 15 days after the end of the month when the tax payment obligation occurs.
Resource tax shall be declared and paid monthly or on a quarterly basis. Where the taxpayer is unable to compute and pay resource tax in accordance with a fixed cycle, declaration and payment may be made on a transaction basis.
Taxpayers declaring and paying tax monthly or quarterly shall complete declaration and payment formalities with the tax authorities within 15 days from the last day of a month or a quarter. Taxpayers making declarations and payments on a transaction basis shall complete declaration and payment formalities with the tax authorities within 15 days from the date of occurrence of tax payment obligation.
Environmental protection tax
Environmental protection tax shall be calculated on a monthly basis, declared, and paid on a quarterly basis.
In the event of filing tax return quarterly, a taxpayer shall file tax return and pay the tax within 15 days from the end date of a quarter.
Taxpayers who do not present the proper information on tax payment within the specified time limit, may be ordered to correct the situation or face fines of not more than RMB 2,000 (US$290). If the offenses are serious, the taxpayer may be fined between RMB 2,000 (US$290) and RMB 10,000 (US$1,450).
Failing to make tax declarations and adequately pay the tax payable will lead to penalties for late payment, in addition to the payment of the amount of tax owed. The taxpayer shall also be fined not less than 50 percent but not more than five times the amount of tax it fails to pay or underpays.
These types of violations can affect the tax credit rating of businesses, which will lead to increased tax supervision.
To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at firstname.lastname@example.org.
DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.