In order to encourage foreign investors to continuously expand their investment in China, create a better environment for the long-term development of foreign-invested enterprises, and expand mutually beneficial and win-win cooperation, for the profits distributed to foreign investors by domestic resident enterprises which are directly invested in projects and fields not prohibited from foreign investment, if requirements are fulfilled, deferred tax payment policy will be applicable and no withholding income tax will be levied temporarily.

Q:	What is overseas investor?
A:	The term overseas investor refers to a non-resident enterprise  that is subject to  the provisions of paragraph 3 of Article 3 of the enterprise income tax law, i.e. those do not establish any institutions or place in China, or those have established institutions or places but income obtained has no actual connection with the institutions and places.
Q:	What requirements should be fulfilled?
A:	An overseas investor that is temporarily exempted from withholding income taxes shall concurrently meet the following conditions: 1. The direct investment made by the overseas investor with distributed profits includes the equity investment made by the overseas investor, such as increased capital funds, new construction, equity acquisition, among others, with the distributed profits, but excludes the increase, conversion or acquisition of shares of a listed company (excluding eligible strategic investment); 2. The profits distributed to the overseas investor are the dividends, bonuses or other equity investment income formed by the retained income that is actually distributed by a resident enterprise within the territory of China to the investor and has been realized; 3. Where the profits of the overseas investor used for direct investment are paid in cash, the relevant funds shall be directly transferred from the account of the profit distributing enterprise to the account of the invested enterprise or the equity transferor, and shall not be turned over to other domestic or overseas accounts before the direct investment is made; and where the profits of the overseas investor used for direct investment are paid in kind, negotiable securities or other non-cash forms, the ownership of the relevant assets shall be transferred directly from the profit distributing enterprise to the invested enterprise or the equity transferor, and shall not be held by any other enterprise or individual on its behalf or be held temporarily before the direct investment is made.
Q:	How does a qualified overseas investor apply to enjoy the policy of temporarily exempted from withholding income taxes?
A:	The overseas investor shall complete an Information Report Form for Deferred Payment of Withholding Taxes by Non-Resident Enterprises and submit it to the profit distributing enterprise. The overseas investor shall, when apply for enjoy the policy after paying income tax, submit an  Information  Report  Form for  Deferred Payment of Withholding Taxes by Non-Resident Enterprises and related contract, payment proof and other materials used to apply tax refund to the competent tax authority of the invested enterprise.
Q:	How do profit distribution enterprises operate when overseas investors apply to enjoy the policy of temporarily excluding withholding income tax?
A:	Review the information submitted by overseas investors in accordance with the provisions, and confirm that the information filled in by the overseas investors is complete and there are no missing items; the actual payment process of profits is consistent with the information filled in by the overseas investors; the information filled in by the overseas investors involves the profit distribution enterprises, which is true and accurate. Within 7 days from the date of actual payment of profits, submit to the competent tax authorities the "report form of withholding enterprise income tax of the people's Republic of China" filled in by the profit distribution enterprise, and the Information Report Form of Deferred Payment and Withholding Tax of Non-resident Enterprises submitted by the overseas investors and supplemented by the profit distribution enterprises.
Q:	After overseas investors enjoy the policy of not collecting withholding income tax temporarily, how to deal with the tax not collected temporarily if the investment is actually recovered?
A:	If an  overseas investor,  who has enjoyed the policy of temporarily excluding withholding income tax, actually recovers the dividend, bonus and other equity investment income by means of equity transfer, repurchase, liquidation and other disposal methods, it shall declare the supplementary tax to the tax authorities within 7 days after the actual receipt of the corresponding funds. If an overseas investor has enjoyed the policy of temporarily exemption of withholding income tax, and the reorganization of the invested enterprise meets the special restructuring conditions and actually carries out tax treatment according to the special reorganization, it can continue to enjoy the policy of temporary exemption of withholding income tax.
Q:	Can overseas investors enjoy the preferential policy of temporary exemption of withholding income tax if they use their share of profits to make up for their previously committed share of registered capital contribution?
A:	Yes, they can.
Q:	Can overseas investors enjoy the preferential policy of temporary exemption of withholding income tax if they transfer the profits for investment through the special RMB reinvestment account?
A:	Yes, they can.
Q:	If the flow back occurred during the period from January 1, 2017 to January 1, 2018 meets the conditions for enjoying temporary tax exemption, but did not actually enjoy preferential treatment, is it applicable to apply for tax refund and make up for the preferential policy?
A:	Yes.