China's Ministry of Finance announced on December 28 that in order to further actively use foreign investment, promote the growth of foreign investment and improve the quality of foreign investment, and encourage overseas investors to continuously expand their investment in China, it will not levy provisional withholding tax on distributed profits that are reinvested in the country by overseas investors. According to the circular, foreign investors directly invest profits from resident enterprises in China into encouraged investment projects, if they meet the prescribed conditions, it will implement the deferred tax payment policy and will not impose withholding income tax. The temporary exemption of income tax for overseas investors must satisfy the following conditions at the same time: (1) The direct investment made by overseas investors in the form of profit distribution includes the equity investment made by overseas investors in the form of increasing capital, new construction and acquisition of shareholdings, but excluding the additions, conversions and acquisitions of shares of listed companies (Except for eligible strategic investments). (2) The profit distributed to overseas investors belongs to the dividends and bonuses and other equity investment income formed by the actually distributed retained earnings of resident enterprises in the territory of China. (3) Where the profits of overseas investors for direct investment are paid in cash, the related funds are directly transferred from the account of the profit distribution enterprise to the account of the investee or the equity transferor and shall not be allowed to be carried forward to other accounts within or outside the country prior to direct investment; If the profits of the overseas investors for direct investment are paid in non-cash form such as in-kind or negotiable securities, the ownership of the relevant assets is transferred directly from the profit distribution enterprise to the investee or the equity transferor, and no other enterprise or individual should hold or temporarily hold on their behalf. (4) Direct investment by overseas investors on the encouraged investment projects refers to the investee enterprises engaged in the business activities within the following provisions within the investment period of overseas investors. This notice will be effective from January 1, 2017. The notice of dividends and bonuses and other equity investment gains made by overseas investors after January 1, 2017 (inclusive) can be applied to this Notice, and the tax paid may apply for recuperation within 3 years from the date of payment of the relevant taxes.