China further clarifies tax rules on representative offices

Rules and regulations are changing so rapidly in China that taxpayers are having difficulty in keeping up and ensuring compliance with the new developments. This is evidenced by a radical change of taxation of Representative Offices (ROs), with the issuance of the new circular [Guo Shui Han (2004) No. 568] that reinstated the ability for ROs of principal suppliers to apply for tax exemption. Below is an overview of the tax treatment of representative offices in China.