Recently, many netizens said that they had already paid the individual tax on cross-border investment income by June 30. It is reported that investors who open accounts through securities brokerages such as Futuo and tiger have become the main target of notices, which include text messages and phone calls, requiring them to check their income from the 2022-20122024 and file tax returns in a timely manner, back payments include taxes and late fees.
Eastern IC
Among them, overseas income should cover dividend income, interest income, sales of financial assets and other income.
The industry believes that the recent increase in back-tax notices may be related to the promotion of CRS (common reporting standard) . China joined the Organisation for Economic Co-operation and Development (OECD) in 2015, and its CRS scheme, launched in 2014, automatically exchanges financial account information with more than 150 jurisdictions around the world, this helps the tax authorities to obtain overseas financial information of residents. Tax authorities compare this information with individual income tax return data to detect underreporting of income earned abroad.
In addition, with the cross-border investment monitoring technology and policy enhancement, the implementation of the global tax is increasing, began to formally recover this year. CRS exchanges information including investor tax information and data fields such as account balance, dividend interest sales amount, but does not include the profit amount, so requires taxpayers to self-check calculation and self-report. In addition, through cross-border capital flow monitoring, foreign investment record information comparison, foreign exchange data screening, etc. , can also accurately identify unusual transactions. The system will automatically trigger a risk alert and the tax authorities will follow up if there are large amounts of funds coming and going from overseas accounts or undeclared returns from overseas investments, etc. .
The personal income tax of individual residents in Hong Kong and the United States mainly involves two types: one is the capital gains tax on the price difference between buying and selling stocks, and the other is the dividend tax, which is 20% . Foreign income tax shall be“Offset”, that is, foreign income shall be taxed in accordance with China’s tax law after it has been paid abroad. If it is paid less, it shall be paid back, and if it is paid more, it can not be refunded, however, the credit may be carried forward for a further period of five years. As Hong Kong and US stocks are not withheld in overseas tax, so the need for 20% tax.
Specifically, for Hong Kong stocks, capital gains from stock transfers are exempt from capital gains tax in Hong Kong and are subject to 20% tax in the mainland. For dividends, H shares and red chips are subject to 10% personal income tax, other non-chinese listed companies are exempt. In the United States, capital gains from stock transfers are exempt from capital gains tax and subject to domestic tax. Dividends are subject to a 10% tax rate as agreed between China and the United States. For example, if an investor has already paid 1,000 yuan of personal tax on an investment income overseas, according to the Chinese tax law, he should pay 1,200 yuan, then he has to pay 200 yuan at home; if he has paid 1,500 yuan overseas, the extra 300 yuan can not be refunded, but it can be credited to other overseas income taxable amounts within the next five years.
It is reported that cross-border stock trading in the same tax year after the profits and losses can be offset against tax, but not allow cross-year offset. In accordance with the personal income tax law, property transfer income tax, no profit and loss set-off provisions, but the actual operation of communication with the tax department, according to the annual net income tax.
Individual investors should sort out individual investment details as early as possible, and keep original documents such as transaction statements and delivery notes of overseas securities firms and banks, so as to facilitate settlement and tax inspection. If the tax has been withheld outside Hong Kong, you can apply for the credit within the credit limit with a valid certificate. At the same time, to continue to pay attention to the changes in the tax law, in the settlement period to maintain communication with the tax authorities. If the income situation is complicated, we can hire professional organizations to provide compliance services. Trading in the need to note that the transfer of income from speculation in A-shares, through the shanghai-hong Kong stock connect and Shenzhen-hong Kong stock connect speculation in Hong Kong stocks, 2027 before December 31 transfer of income tax-free.
When the tax authorities find the clues of tax-related problems, they will follow the“Five-step working method” of“Prompt Reminder, supervise rectification, interview warning, file a case for investigation and public exposure”. After receiving the reminder, the taxpayer should actively cooperate, comb the income and declare the tax situation, sort out the supporting materials, make up the undeclared or underreported income in time, or explain the situation to the tax department and provide the materials, avoid being placed on file for non-cooperation. (Shiyi Chen)