Our company is a Hong Kong company, and now our subsidiary in Guangzhou needs to pay dividends to Hong Kong in previous years. What is the income tax rate to be paid?

It belongs to the category of non-resident tax.

The distribution of after-tax profits before 2007 is subject to the old income tax law of foreign-funded enterprises, and the new law is applicable after 2008. The latest basis is as follows:

Foreign investors (Hong Kong, Macao and Taiwan) constitute non-resident enterprises in China. Article 3 defines the scope of taxation and Article 4 defines the statutory tax rate. The preferential tax rate stipulated in the detailed rules is 10% (in line with international standards and practices). The Mainland and Hong Kong have arrangements to avoid double taxation (equivalent to bilateral tax treaties), and the qualified after-tax profit share is reduced by 5%.

The legal provisions are as follows: "People's Republic of China (PRC) Enterprise Income Tax Law";

Paragraph 3 of Article 3: If a non-resident enterprise has not established an institution or place in China, or if it has established an institution or place, its income has no actual connection with the institution or place it has established, it shall pay enterprise income tax on its income originating in China.

Paragraph 2 of Article 4: Non-resident enterprises obtain the income specified in paragraph 3 of Article 3 of this Law, and the applicable tax rate is 20%.

The detailed rules for implementation stipulate that non-resident enterprises shall collect enterprise income tax at the reduced rate of 10% if they obtain the income specified in the third paragraph of Article 3 of this Law.

Article 19 When a non-resident enterprise obtains the income specified in the third paragraph of Article 3 of this Law, the calculation method of its taxable income is as follows:

(1) Income from dividends, bonuses and other equity investments, as well as interest, rent and royalties, shall be regarded as taxable income in full;

Therefore, the income tax rate of dividends distributed by your company to Hong Kong investors is 10%.

In addition, according to the arrangement of avoiding double taxation between Hong Kong and the Mainland, if Hong Kong investors hold more than 25% of the shares, the dividends distributed can be implemented at a preferential tax rate of 5% (Article 10 of CEPA). It must be approved by the tax authorities before implementation.

& lt Arrangement between the Mainland and the Hong Kong Special Administrative Region on Avoidance of Double Taxation and Prevention of Tax Evasion on Income;

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