A group of foreign banks in China have asked the Chinese government to delay a recently imposed tax on interest paid on borrowings from overseas, the Wall Street Journal reported, citing a petition signed by 36 foreign lenders.
China is starting to levy a 10 percent withholding tax, retroactive to Jan. 1, on interest payments on all loans to banks in China from overseas lenders, the paper said on its website.
A lower rate of 7 percent will be placed on lenders from places with which China has a tax treaty, such as Hong Kong, it said.
The 36 foreign banks, which include HSBC Holdings Plc , Standard Chartered Plc and Bank of East Asia , said in their petition that the tax was an excessive burden on their China operations, which typically have small deposit bases, and are more reliant than local rivals on borrowing from overseas sources, such as their parent companies.
The foreign banks have asked that they only be required to pay the withholding tax on interest payments that occur after Dec. 4 while Beijing reviews the petition, and that any back-payment be put on hold, the Journal said.
HSBC and Citibank declined to comment on the report. Standard Chartered and Bank of East Asia could not be immediately reached for comment.
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