Our client is located in the South East Asia region, providing IT solutions to financial institutions. It won a project in Beijing (China) to provide IT solution for a foreign bank. Our client outsources the hardware domestically in China while insourcing the software from an offshore company. It sends technicians from its HK subsidiary to Beijing to perform the work.
As there are different entities from different jurisdictions involved in the IT solution project, he question is to which entity is Chinese tax applicable, and what taxes are applicable then becomes a complicated issue.
We analyse the whole project from tax treaty perspectives, and also from Chinese tax law perspectives, and help our client understand the tax implications in each chain of the business deal. We have reminded our client of the relevant compliance requirements, both in the contract execution state and at the contract fulfilment stage.
Our client is implementing this project in China and has consulted from time to time on related Chinese tax issues, and has come to terms with compliance requirements. The project is going smoothly.