China’s Dividend Withholding Tax

According to the relevant regulations of the PRC, China-sourced dividend income paid to non-resident enterprises outside China and foreign individuals shall be subject to dividend withholding tax in China. The applicable dividend withholding tax policy for foreign individuals and foreign enterprises are different. The specific rules are as follows:

1. Foreign Individuals
   
   Under the new rules that are effective from 1 September 2026, dividends received by foreign individuals from foreign invested enterprises registered in China shall be subject to individual income tax at a standard tax rate of 20%. Foreign invested enterprises must withhold the tax when paying and remitting out dividends to foreign individuals, and file and pay the tax to the competent tax authority by the 15th of the following month. If the tax is not withheld by the foreign invested enterprise, foreign individuals are required to pay it directly to the competent tax authority before June 30 of the following year. If the foreign individual is a tax resident of a country or region that has a double taxation avoidance agreement with China, a lower tax rate may be applied.
   
   
2. Foreign Enterprises
   
   Dividends received by non-resident enterprises outside China from foreign invested enterprises registered in China shall be subject to corporate income tax at a tax rate of 10%. Foreign invested enterprises must withhold the tax when paying and remitting out dividends to non-resident enterprises, and file and pay the tax to the competent tax authority within 7 days after payment of dividends. A lower tax rate may be applied if there is a double taxation avoidance agreement between China and the country or region in which the enterprise is a tax resident.

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