In December 2017, the People’s Bank of China (PBOC), the State Administration of Taxation (SAT) and the State Administration of Foreign Exchange (SAFE) jointly issued the Detailed Rules for Deposit-Taking Financial Institutions in Banking Sector on Due Diligence Procedures for Non-residents’ Financial Account Information in Tax Matters (the “Rules”). When compared to the Administrative Measures on Due Diligence Procedures for Non-residents’ Financial Account Information in Tax Matters (the “Measures”)1 jointly issued by the SAT, the Ministry of Finance and the “one bank and three commissions”2, the Rules provide further guidance and requirements on how the deposit-taking financial institutions in the banking sector (the “Banks”) should collect, record and report tax-related information of financial accounts held by non-residents.
The Rules took effect from 18 December 2017. However, the Banks in China have started due diligence procedures on non-resident financial accounts from 1 July 2017 according to the Measures. As a result, there may be some differences among the Banks’ existing due diligence procedures and the requirement as prescribed under the Rules. As such, the Banks should review and modify their existing due diligence procedures with reference to the requirements under the Rules, where necessary, and reassess their due diligence results based on modified procedures in order to avoid any potential compliance risk.