How would the PRC tax authorities secure the payment of income tax?
Neither the FIE's bank accounts nor its assets in China are safe from the taxman's claws. If a WFOE fails to pay its tax on time, it should be given a deadline for squaring up with the tax authorities. As an enterprise engaged in production, if the WFOE fails to make the payment by the specified deadline, the tax authority may (subject to the approval by the head of a tax bureau at county level or above):
Order that the FIE's bank to withhold from the FIE's accounts the amount due plus any surcharge for overdue payment; or
Seize and sell other assets belonging to the FIE equivalent to the value of the amount due plus any surcharge for overdue payment.
In addition, under Article 46 of the Tax Collection Law, the tax authorities can possibly impose a fine of up to five times the unpaid or underpaid amount.
Back
