The deadline for the 2022 tax year’s corporate income tax (CIT) reconciliation is at the conclusion of May 2023. The process, also known as annual CIT filing, is compulsory for all eligible taxpayers and must be completed within five months of the end of the tax year, which runs from January 1 to December 31. Its purpose is to assess whether all tax liabilities have been fulfilled and to determine whether the company is required to pay additional taxes or request a refund.
Are you a non-resident enterprise?
A non-resident enterprise refers to enterprises lawfully incorporated in accordance with the laws of foreign countries (regions) with no actual management organization China, but having an office or premises established in China, or having income derived from China although it does not have an office or premises in China.
According to the Administrative Measures for Final Settlement and Payment of Non-resident Corporate Income Tax [Guo Shui Fa  No. 6], revised in 2018, non-resident enterprises that have been established under foreign (or regional) laws and whose actual management institutions are not located in China but have establishments or premises in China, should participate in the settlement and payment of income tax, regardless of whether they have recorded profits or losses.
What would happen if you fail to reconciliate your CIT?
As per the circular, if a company does not pay the necessary taxes within the designated period or does not provide and submit the required documentation, it will be dealt with according to the regulations of the Tax Collection and Management Law of China and its associated implementation rules.
What are some general steps of Annual CIT?
What materials are required for the annual CIT filing?
The principal document that must be filled out and presented is the Annual Non-Resident CIT Form (2019 version), which is utilized for the Non-Resident Enterprise Income Tax in the People’s Republic of China. In addition, a variety of attachments are required to be completed and submitted where applicable.
Completing the annual CIT filing in China can be quite complex, particularly for companies that have numerous operations scattered throughout a city or region. Consequently, errors can occur, resulting in inadvertent breaches of China’s tax regulations and the imposition of penalties.
To minimize these risks and guarantee a seamless tax settlement process, it is advisable to engage tax specialists in China to provide guidance and help with tax filing procedures.