China's Ministry of Finance and the State Taxation Administration have jointly issued a new announcement detailing the individual income tax treatment for dividends and bonuses received by foreign nationals. According to the notice, income derived from dividends and bonuses by foreign individuals from foreign-invested enterprises will be categorized under "interest, dividends, and bonus income" and will be subject to individual income tax at a flat rate of 20%.

Under the new regulation, foreign-invested enterprises are required to withhold and remit the tax when making dividend payments to foreign nationals. The withheld tax must be declared and paid to the tax authorities by the 15th day of the month following the month in which the payment is made.

In cases where the enterprise fails to withhold the tax, the foreign individual receiving the dividend income is responsible for paying the tax by June 30 of the year following the year in which the income is derived. Additionally, if tax authorities issue a notice requiring payment within a specified timeframe, the foreign national must settle the tax liability within that prescribed period.

The announcement takes effect on September 1, 2026, providing a lead time for affected parties to adjust their compliance procedures.