Shanghai: P&I Club Gard has warned members that China’s new enterprise tax system, introduced in August, remains opaque and tricky for international shipowners calling in the People’s Republic.
The new tax system formally puts tax withholding duties in the hands of charterers and customers and it significantly increases applicable tax rates.
“The measures are in their infancy but there is scope for uncertainty surrounding both their application and enforcement,” Gard said in a note to its members. The club advised owners to seek specialist tax advice on their potential exposure to Chinese taxes, in particular whether any exemptions apply and whether the terms of the contracts with third parties already make provision for which party is to bear liability for Chinese taxes.
“Given the unsettled questions of interpretation, collection and enforcement of the tax, the actual tax burden from calling at Chinese ports may remain unknown for some time,” Gard concluded. [04/02/15]