China has introduced an important change to the Individual Income Tax treatment of dividends received by foreign individual investors. Effective from 1 September 2026, the long-standing IIT exemption for dividends distributed by Chinese companies to foreign individuals no longer applies. Dividends received from Foreign-Invested Enterprises are now subject to a 20% IIT rate, marking the end of a preferential treatment that had been available for more than three decades. The new rules may have a significant impact on foreign individual shareholders, existing investment structures, and future investments in China.

 

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