The Memorandum on promoting the information sharing mechanism and implementation of joint supervision ("the Memorandum") was signed by the State Administration of Taxation (SAT) and State Administration of Foreign Exchange (SAFE) on 14 November 2016 in Beijing. According to the Memorandum, the SAT and SAFE will monitor and assess the export tax refund, cross-border tax source and forex collection and remittance, in order to achieve the purpose of information exchange, cross supervision and outcome sharing between two sides. Via the information sharing platform of tax collection and forex administration, tax bureaus will have a better understanding of the enterprises' cross-border business and its relevant tax issues, which facilitates enhancing their supervision.
The detailed information regarding method of information sharing, frequency of information exchange and how the two platforms of SAT and SAFE interface with each other under the principle of the Memorandum remains to be further clarified. In the meanwhile, it is anticipating whether the process of tax matters relating to forex would be simplified.
In this issue of China Tax/Business News Flash, we will briefly introduce how the information sharing mechanisms of SAT and SAFE would push for a more strict supervision, analyse the impact of information sharing on tax payers, look forward to the relevant implementation rules and share our observations and views.