A newly issued joint announcement by the Ministry of Finance and the State Taxation Administration stipulates that dividend income obtained by foreign individuals from foreign-invested enterprises should be categorized under "interest, dividends, and bonuses" for the purpose of individual income tax, subject to a flat rate of 20%.

The policy, which comes into effect from September 1, 2026, outlines specific procedures where foreign-invested enterprises are required to withhold the tax at the time of paying dividends to foreign individuals and must file the tax returns with the authorities by the 15th day of the month following the payment. Should the enterprise fail to withhold the tax, the responsibility falls on the foreign individual, who must settle the tax liability before June 30 of the following year, or within a specified timeframe if the tax authorities issue a notice requiring payment within a defined period.

This new announcement, designated as Public Notice No. 27 of 2026, simultaneously invalidates item (8) of Article 2 in the former "Notice on Several Policy Issues Concerning Individual Income Tax" (Cai Shui Zi [1994] No. 20), effectively replacing the previous preferential treatment that had applied to such foreign individuals. All enterprises and taxpayers affected by this change should ensure compliance with the new regulations, which took effect starting today.