ABSCPA - Hong Kong Company Incorporation, Offshore Company Formation

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Lower withholding tax in china for dividend

Background
  1. France company (F Ltd) 100% own a subsidiary WFOE (C Ltd) in China;
  2. C Ltd provide consulting service to China based business;
  3. Dividend by C Ltd to mother company F Ltd is taxable in China;
  4. The withholding tax rate is 10% for a France company.
New arrangement
  1. France company (F Ltd) setup a Hong Kong (H Ltd);
  2. H Ltd 100% own a subsidiary WFOE (C Ltd) in China;
  3. C Ltd provide consulting service to China based business;
  4. Dividend by C Ltd to Hong Kong mother company H Ltd is taxable in China;
  5. The withholding tax rate is 5% for a Hong Kong company.
  6. Dividend income is non-taxable in Hong Kong.
Remark
  • This withholding tax rate in China is varies and depends on country or region.
  • Egypt company is 8%;
  • US company, Japan company is 10%;
  • Hong Kong company is 5%.
Detail benefit on using Hong Kong company to enter China market.
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