China Issues New Regulations to Convenience Cross-Border Environmental Equity Transactions
Jan. 6 – China has recently issued a new circular to promote environmental equity transactions. This is regarded as another effort to reduce China’s carbon dioxide emissions and other pollution.
The State Administration of Foreign Exchange (SAFE) issued the “Circular on Issues Relating to Handling Foreign Exchange Business for Cross-border Environmental Equity Transactions such as Carbon Dioxide Emission Reduction” (huizongfa [2010] No. 151) on December 3. It clarifies the following issues:
- When a bank processes cross-border environmental equity transaction payment collection procedures (such as carbon dioxide emission reduction) according to the requirements of the involved domestic institutions, it may make an exchange settlement or open a foreign exchange account with “capital item-environmental equity transaction” in the title so that the domestic institutions can retain the foreign exchange income
- A domestic environmental equity exchange, if it receives the verification from the SAFE, may open a foreign exchange account with “special trading margin” in the title to retain or transfer the related trading margin, trading commission and taxes
- The circular also specifies the relative requirements for material verification, information reporting, basic information registration and international payment balance declaration
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