To the foreign branches of Beijing Local Taxation Bureau:
We are hereby forwarding you the Notice of State Administration of Taxation on Further Strengthening Taxation Control on Foreign Contractors (Guo Shui Fa [2004] No. 5). Please follow the notice.

February 27, 2004


Document from State Administration of Taxation
Guo Shui Fa [2004] No. 5

Notice of State Administration of Taxation on Further Strengthening Taxation Control on Foreign Contractors

To the national taxation bureaus and local taxation bureaus of each province, autonomous region and municipality and separate planning city:
In order to strengthen the taxation control on those foreign enterprises and individuals (hereinafter referred to as contractors) who come to China to contract projects of marine and land cooperative foreign oil (gas) fields and marine self-supporting oil (gas) fields or provide labor services (hereinafter referred to as contracting oil projects and providing labor services) in China, guarantee the implementation of national tax laws, we hererby, according to the Law of People’s Republic of China on the Administration of Tax Collection (hereinafter referred to as the Law on the Administration of Tax Collection) and the Implementing Rules, and the Method of People’s Republic of China on the Administration of Invoices (hereinafter referred to as the Method of the Administration of Invoices) and the Implementing Rules, clarify the taxation matters on the contractors as follows:
1, Contractors shall pay each item of tax according to China’s tax laws and related regulations for their income made by contracting oil projects and providing labor services on the sea area and land of China. The individual income tax of the staff members employed by the contractors shall be withheld and remitted by the contractors.
2, The contractors who come to China to contract oil projects and provide labor services shall, within 30 days since they get the business license or sign the contract, make tax registration with competent tax authorities and make declaration according to laws. The contractors may go though formalities for tax declaration by themselves or entrust an agent to handle these matters.
3, The companies which sign the contract with contractors for contracting oil projects or providing labor services (hereinafter referred to as contract-issuing party) shall, within 15 days since the contract is signed, report the related details such as contractor name, contractor project, contract price, duration of the contract, operation location and the name, address, phone number of representative of contractor, etc. to the competent tax authorities. Those who need to frequently sign contracts of such business may, upon application by contract-issuing party and approval from the competent tax authorities, summarize the above-mentioned information and report them in regular manner. The contract-issuing party mentioned in this notice refers to the domestic and foreign enterprises engaged in Sino-foreign cooperative oil prospecting, exploitation, production and oil project contracting.
4, When contractors make profits, they shall issue to the contract-issuing party the invoice made under the supervision of tax authorities according to the regulations. Invoices issued aboard shall be exchanged in the competent tax authorities, and attached behind to the invoice made under the supervision of the competent tax authorities as the voucher of clearing to contract-issuing party. The contract-issuing party shall make the payment stipulated in the contract in accordance with the invoice made under the supervision of competent tax authorities the contractors hand in to them.
5, To those contractors who fail to make tax registration, the competent tax authorities may, according to the Law on the Administration of Tax Collection and implementing rules, check and ratify the tax that shall be paid by contractors, and the contract-issuing party may withhold and remit the payable tax when making payment in the contract.
6, The contract-issuing party who need to pay foreign exchange beyond the borders (contractors’ income of contracting or services) shall, in accordance with related rules in the Notice of State General Administration of Exchange Control and State Administration of Taxation on Submitting Tax Payment Receipts Concerning Non-trade and Part Capital Projects (Hui Fa [1999] No. 372), provide the administrative department of exchange with the tax payment receipt or tax exemption certificate issued by the competent tax authorities.
7, The contractors who need to leave China shall pay tax in arrears, surcharge or provide guaranty to the competent tax authorities before leaving. To those who fail to settle the payment or provide guaranty, the competent tax authorities may notice the exit administration authority to prevent them from leaving according to related laws.
8, This Notice shall come into effect from the date of receiving, and the former Notice of State Administration of Taxation on Strengthening Taxation Control on Foreign Contractors of Cooperative Oil Fields (Guo Shui Fa [1994] No. 213) shall be null and void at the same time.


January 8, 2004