China will end a tax exemption dating back more than three decades for dividends and bonuses paid by foreign-invested enterprises to foreign individuals. Effective September 1, 2026, the income will fall under individual income tax at a 20% rate. The Ministry of Finance and the State Taxation Administration require enterprises to withhold and remit the tax and file returns within 15 days after the month of payment. If withholding does not occur, recipients must pay by June 30 of the following year, or by another deadline set by tax authorities. The measure repeals Item (8) of Article 2 of the 1994 tax notice, which was introduced to support reform and opening-up and attract foreign capital. Officials and industry observers say the exemption became inconsistent with tax fairness and was vulnerable to arrangements that converted enterprises into foreign-invested companies before distributing large dividends. Experts note that foreign individuals may be able to credit the China tax against liabilities in their home countries under worldwide income taxation systems, limiting the increase in effective burden. The change is also presented as part of China's effort to build a unified national market and place domestic and foreign enterprises on a more equal tax footing.