The use of technology, trademarks or other rights of overseas companies by multinational enterprises in China will involve the payment of cross-border royalties. . Most enterprises will file tax declarations with Chinese tax authorities to withhold and pay corresponding taxes when paying royalties through non-trade transactions. However, it is very likely to overlook the customs implications involved, and therefore fail to declare the royalties related to the imported goods to the customs in a timely manner, leading to customs audits and ultimately administrative penalties. The issue of whether the royalties will be taxed by both customs and tax authorities, thereby triggering double taxation, has always been a concern for multinational companies in China. This article will introduce the customs implication on royalties and remind enterprises to pay attention to the customs obligations arising from cross-border payment of royalties

Note: The following article is the second article of the series discussion regarding “Listing and Financing of FIEs in China” 1. Financing and control Some foreign enterprises are concerned that their equity in the foreign invested enterprises established by them in China (“FIEs”), will be continuously diluted in the course of financing, potentially resulting in losing the control over the FIEs or even be sidelined from management. While these concerns may have some merit, they don't always hold true.

With the successive promulgation of the Cybersecurity Law, Data Security Law, Personal Information Protection Law, and their supporting regulations, compliance requirements for cross-border data transmission have become a task that Chinese enterprises must take seriously. Specifically, enterprises with a need for Cross-Border Data Transmission (for example, overseas companies investing in and establishing production or trade enterprises in China, cross-border e-commerce stores, etc.) should establish their own cross-border data export compliance system in accordance with these legal requirements. However, the issue here is, how can companies with relatively small data outbound volumes, especially for these small and medium-sized enterprises (SMEs), act according to their needs and strive to set up a data outbound compliance system that meets the requirements of regulators at the lowest possible cost?