A recent announcement from the Ministry of Finance and the State Taxation Administration, effective from September 1st, clarifies that foreign nationals receiving dividend distributions from foreign-invested enterprises will now face an individual income tax rate of 20% on these earnings.

This new regulation, which took effect immediately on September 1st, applies to dividend income derived from foreign-invested enterprises. The 20% tax rate will be levied on the gross amount received by the foreign individual, aligning this type of income with other taxable personal earnings under Chinese tax law.

The policy marks a shift in the tax treatment of such income for non-resident individuals, who previously were not subject to this specific tax on dividends. Stakeholders are advised to review their dividend structures and tax withholding obligations in light of this update.