On 1 September 2026, the PRC Ministry of Finance and the PRC State Administration of Taxation jointly issued Announcement [2026] No. 27 („Announcement 27“), which officially terminates the long-standing Individual Income Tax („IIT“) exemption treatment on dividends distributed by foreign-invested enterprises to foreign individuals (including Chinese citizens from Hong Kong, Macau and Taiwan from PRC tax perspectives). Taking effect on the date of its release, Announcement 27 officially brings a 32 years‘ era of preferential IIT treatment to an end.

Gilbert Shen, Counsel at CMS China, will provide an overview of Announcement 27 and its practical implications as well as the utilization of tax treaties in the context of cancellation of IIT exemption.