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China Relaxes Procedures To Send Cash Out Of Country

iStock_000015914943XSmallAccording to a recent Deloitte webcast China is simplifying its procedures for outbound payments.

Bulletin [2013] No. 40 and Huifu [2013] No. 30 removes the requirements of tax clearance certificates for outbound payments.

Also, SAFE is allowing cross-border cash pooling for pilot multinational companies and state-owned enterprises. This allows for cross-border intercompany borrowing, lending and netting or cash pooling (within limits). Tax considerations include deductibility of intercompany interest expense, withholding tax on interest payments, and transfer pricing issues concerning intercompany charges.

Further, excess cash from the China operations of an MNC could be used to finance overseas cash needs of sister companies via equity or debt.

Can we expect more easing of cross-border movement of Renminbi as China prepares its way for Renminbi to become one of the global reserve currencies?

In accordance with Circular 230 Disclosure

Director of Taxes with over 16 years of progressive experience in international corporate tax gained in Big 4 accounting firms and multinational companies in the U.S., Canada and Hong Kong.

Experience in leading a group of tax professionals and hands-on skills in income tax provision and reporting, income tax treaties, transfer pricing , international tax planning and tax audits.

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