On Feb. 20th, SAT issued a Circular which requires that qualified foreign institutional investors (QFII) shall pay 10 per cent corporate income tax of dividends, bonuses and interest income gained in China in accordance with PRC Enterprise Income Tax Law.
In light of the Circular, the domestic enterprises shall pay the withholding taxes for QFII for the above income. QFII entitled for preferential treatment under any bilateral tax treaties shall send application to related tax office.
The administration also ordered local tax bureaus to follow the information about QFII's investment and provide tax service and keep the necessary records to ensure that taxes are duly paid. (Feb 27th 2009)