What are the foreign currency restrictions on overseas payments?
Foreign exchange in China is under the supervision of the State Administration of Foreign Exchange (SAFE), which delegates its authority to banks to conduct checks on foreign currency payments. In order for banks to approve overseas payments, the transferring investor must present various documents to the bank. In the case of remitting service fees, the documents required include the service contract, invoice and tax receipt. When remitting dividends and bonuses, the documents required include an audit report issued by an accounting firm on the annual dividend and bonus situation, a board resolution on distribution of the dividends and bonuses. Regardless of the amount involved, tax compliance is important as tax liability will be exposed through tax audits, resulting in hefty penalties.