China Regulatory Brief: Tax Benefits for Advanced Technology Service Enterprises, and New Foreign Investment Catalogue

Preferential tax policies implemented for advanced technology service enterprises

On November 10, 2016, the Ministry of Finance, the State Administration of Taxation (SAT), the Ministry of Commerce, the Ministry of Science and Technology, and the National Development and Reform Commission jointly issued a notice regarding an initiative for implementing preferential enterprise income tax (EIT) for advanced technology service enterprises that are located in cities with service trade innovative development pilot progams. Eligible business scopes include information system integration services, data services, research and experiment development services, industrial design services, intellectual property right cross-border license and transfer, cultural product digitalization and related service, translation, dubbing and production services of cultural products, and Chinese herbal medicine, medical, health care and related services. Between the period of January 1 to December 31, 2017, enterprises meeting the requirements in cities such as Tianjin, Shanghai, Hainan, Shenzhen, Hangzhou, Wuhan, Guangzhou, Chengdu, and Suzhou are eligible for to pay a reduced rate of 15 percent EIT. Employee education expenses incurred for such activities are also eligible for deduction from taxable income for up to eight percent of the enterprise’s wages; any excess is able to be rolled over to the following financial year.

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Updated Catalogue of Industries for Guiding Foreign Investment released for seeking comment

The Ministry of Commerce is seeking comment for a revised edition of the updated Industries for Guiding Foreign Investment. It now allows for investment into rail transit equipment, auto electronic equipment and new-energy auto batteries, motorcycles, edible oils, corn processing, fuel ethanol, as well as the mining of unconventional petroleum and gas, and rare metals. The revised edition reduces the amount of restricted items from 93 in 2015 to 62.

SAT issues trial implementation procedures for stamp tax administration

The SAT has issued trial implementation procedures for stamp tax administration, which standardizes the issues of tax source administration, tax collection, management of tax reduction, tax exemption and tax refund, and risk management in the process of the collection and administration of stamp tax. It suggests that tax authorities may implement an information exchange mechanism with banking, insurance, business, and real estate regulators to reinforce tax source management. It also stipulates that if the payable tax amount on a document exceeds RMB 500, taxpayers may supplement a tax payment voucher or tax payment certificate with the document in replacement of stamps.

State Council encourages the development of Central China’s economy

An executive meeting of the State Council on December 7, 2016 reviewed and passed planning to promote the development of information technology in China’s central regions in accordance with the 13^th Five Year Plan, which focuses on the upgrade of the region’s economic structure. The meeting also passed an amendment to the Water Pollution Prevention and Control Law. All efforts that encourage the economic gradient transfer of environmental protection enterprises operating in the southeast coastal regions to the central regions will be supported, and any efforts for opening to the outside world will be advanced, and bonded areas will be encouraged.

Tax, Accounting, and Audit in China 2016
This edition of Tax, Accounting, and Audit in China, updated for 2016, offers a comprehensive overview of the major taxes that foreign investors are likely to encounter when establishing or operating a business in China, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China-based operations.
An Introduction to Doing Business in China 2016
Doing Business in China 2016 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates in June 2016, this comprehensive guide is ideal not only for businesses looking to enter the Chinese market, but also for companies who already have a presence here and want to keep up-to-date with the most recent and relevant policy changes

Human Resources and Payroll in China 2016-2017
A firm understanding of China’s laws and regulations related to human resources and payroll management is absolutely necessary for foreign businesses in China. This edition of HR and Payroll, updated for 2016/17, navigates China’s laws and regulations related to HR and payroll management – essential information for foreign investors looking to establish or already running a foreign-invested entity in China.

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