Generally, for tax treatment decisions (e.g., imposition of taxes, imposition of late payment penalties and withholding of taxes), the taxpayer should pay taxes first and then it has 60 days to file an application for an administrative review after the tax authorities have issued a receipt for the payment of taxes or late payment interest. If the reviewing authority upholds the tax decision, the taxpayer can file a tax administrative litigation within 15 days. In the case of a dispute that does not involve a tax treatment decision (e.g., tax administrative penalty), the taxpayer has the option of applying for a judicial review directly within 15 days of the tax decision (instead of applying for an administrative review).
Disputes involving tax treatment decisions must first be brought to the tax authorities for an administrative review before the taxpayer can instigate a judicial review. However, disputes involving other tax administrative decisions are not subject to this restriction and a taxpayer may choose to pursue either an administrative or a judicial review of the dispute.
In addition to seeking a judicial review of a tax treatment decision or other tax administrative decision, a taxpayer may initiate legal proceedings for a judicial review with a local people's court if the Administrative Review Office of the relevant tax authority does not make a final determination within the time limit prescribed or if the Administrative Review Office has rejected an application for an administrative review.
The time associated with the tax litigation process will depend on the complexity of the matter.
- Administrative level: The Administrative Review Office has, upon receipt of an application for an administrative review, 60 days to reach a decision.
- Judicial appeal level: The Administrative Proceedings Law provides that the court will complete its trial on the case within six months after the court has accepted the case. If a party applies for an appeal of the trial judgment, the appellate court is supposed to finish the appeal review within three months. In special cases, the trial period or the appeal period may be prolonged upon the approval of the higher court.
- Start: Under most of China's tax treaties, there is a provision for review and agreement between the competent authorities of the treaty jurisdictions. Under such provision, if a taxpayer considers that a tax imposition is not in accordance with the tax treaty, irrespective of the remedies provided by domestic law, the taxpayer may present the case to the competent authority of the jurisdiction of which the taxpayer is a resident. The taxpayer must present the case within three years from the first notification of the imposition of the tax action.
- Conduct of the proceedings: The mutual agreement procedure and court processes will run parallel to each other.
- Completion of proceedings: If a mutual agreement is reached, the Chinese tax authorities will revise the tax decision or make a new tax decision based on the agreement. The taxpayer still has the right to reject the revised or new tax decision and pursue domestic remedies.
- Other actions: China does not provide arbitration proceedings for double tax treaty matters.