On March 4, 2013, the Shenzhen branch of the China Securities Depository and Clearing Company Limited (“CSDCC”) issued the Notice on Payment of After-tax Bond Interest to QFIIs (RQFIIs)1 (Zhong Guo Jie Suan Shen Ye Zi [2013] No.6) (“Notice”). The Notice states that according to the Provisional Measures on the Administration of Withholding at Source of Income Tax of Non-resident Enterprises (Guo Shui Fa [2009] No.3) (“Circular 3”), bond interests obtained by QFIIs and RQFIIs are subject to an Enterprise Income Tax (“EIT”), and bond issuers are the withholding agent (“Withholding Agent”) for such EIT. Accordingly, the Shenzhen branch of the CSDCC specifies that it would generally pay after-tax bond interests when carrying out payments to those claims registered after March 1, 2013. The EIT withheld would be returned to the relevant bond issuers, and then be paid directly to the local tax authorities by the bond issuers.
