18 March 2015
Repatriation of Profits
China allows FIEs and enterprises issuing shares offshore to remit their profits, dividends and bonuses out of the country. Such remittances do not require the prior approval of foreign exchange authorities. The enterprises, by presenting the necessary documents, can make the remittance direct through the bank.
In accordance with the Notice on Issues Concerning the Remittance of Profits, Dividends and Bonuses by Designated Banks, foreign exchange authorities are authorised to carry out random check of remittances amounting to a value equivalent to US$100,000 or more, or remittances deemed suspicious, to determine their authenticity. When the bank handles remittances of profits of an amount at or under the equivalent of US$50,000 for domestic organisations, on principle, verification of transaction documents is no longer required. In handling remittances of profits of an amount exceeding the equivalent of US$50,000, on principle, verification of their financial audit report and capital verification report is no longer required. Rather, the resolution of the board of directors on profit distribution (or resolution of partners on profit distribution) related to the current remittance of profits and the original tax filing form should be verified based on the principle of genuine transaction. After each case of profit remittance, the bank should endorse and stamp on the original copy of tax filing form the amount of profit actually remitted and the date of remittance. In the past, on principle, the amount of profits disposed of by the enterprise in the current year may not exceed the total amount of foreign shareholders’ “dividends payable” and “undistributed profits” listed in the latest financial audit report; but this restriction has now been lifted.