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ARTICLE · 11 JULY 2011

Chinese Charterers Deducting Taxes From Hire Payments

Clyde & Co
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There have recently been a number of reports of owners based in various countries outside China, who have voyage chartered or time chartered vessels to Chinese charterers, whereby Chinese charterers have put owners on notice that they intend to "withhold" amounts from hire or freight payments (ranging between 4.25%-15% of the payment) on the basis that the owners in question are allegedly liable for Business Tax, or Enterprise Income Tax in China, even though the owners are based overseas and ha

ChinaTax
Ik Wei Chong
Ik Wei Chong
Andrew Meadows
Andrew Meadows
Samuel Yang
Samuel Yang
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Introduction: Recent developments in the market

There have recently been a number of reports of owners based in various countries outside China, who have voyage chartered or time chartered vessels to Chinese charterers, whereby Chinese charterers have put owners on notice that they intend to "withhold" amounts from hire or freight payments (ranging between 4.25%-15% of the payment) on the basis that the owners in question are allegedly liable for Business Tax, or Enterprise Income Tax in China, even though the owners are based overseas and have no presence in China whatsoever. The question therefore arises: are Chinese charterers really entitled to withhold such amounts from hire or freight payments?

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