IN order to minimise tax rows the Chinese Revenue authorities have issued directives relating to corporate income tax on services provided by parent companies by seconding personnel to China. Efforts have been made to provide clear guidance in determining whether the Chinese entity under such an arrangement will constitute taxable presence or PE in China.

It is reported that the Announcement 19 is rooted on the tax circular Guoshuifa [2010] No.75 (Circular 75) and a further development in respect of the assessment of PE in China under secondment arrangement where the home entity constitutes taxable presence, apart from the Individual Income Tax usually applicable to the Secondees and EIT will be imposed on the home entity. Announcement 19 will become effective from June 1, 2013, and it also applies to the secondment arrangements made previously.