China Market Watch: Tax Environment and Latest Update on China’s Art Market

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China-market-watch

China to Further Regulate the Publishing Industry

On January 28, the State Administration of Press, Publication, Radio, Film and TV issued the “Measures for the Administration of Press & Publication License,” which shall become effective as of March 1, 2016. The Measures clarified the procedures for designing, printing, issuance, renewal and the cancellation of the publication license. The state and provincial publication department should publicize the issuance or the revoking of the license via their official websites or an authorized newspaper. In the case where a company/individual needs to renew the license, the renewal should be finished within 30 days before the expiration date. Despite relaxations on foreign investment categories over the past years, publishing in China is an industry marked with restrictions and prohibitions for foreign investment. A more detailed introduction of China’s publishing industry can be found in our previous article here.

Professional Service_CB icons_2015RELATED: Pre-Investment and Entry Strategy Advisory
China Tax Environment: Multilateral Instrument to be Implemented in 2017

The Chinese government recently confirmed that it had adopted the “Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Convention)” on February 1, 2016. It has also indicated that the first tax information exchange will take place in January 2017. The Convention applies to 16 Chinese taxes including individual income tax (IIT), corporate income tax (CIT), value-added tax (VAT), business tax (BT) and consumption duty. However, China clarified it wouldn’t assist other countries in the treaty to pursue the unpaid taxes.

The convention provides a multilateral legal framework to implement a new standard for automatic exchange of information endorsed by the Organization for Economic Co-operation and Development (OECD) and its G20 partners. China has become much more aware of the large amounts of undisclosed wealth held in offshore accounts in recent years. The country has already signed about 100 bilateral tax treaties in an effort to combat offshore tax evasion. And this convention is the nation’s first multilateral tax treaty of its kind that will enable automatic information exchange. The Convention was signed by the Chinese government on August 27, 2013 in Paris.

Update on China’s Art Market

In January this year, China’s Ministry of Culture (MOC) released the “Measures for Administration of Artwork Trade (MOU Order No.56),” which will take effect on March 15. The measures are expected to standardize China’s domestic art market, further regulate the trading behaviors, as well as protect the lawful rights and interests of the authors, traders and consumers.

The Measures have covered five main artwork businesses: purchasing/renting and selling artwork, managing artwork operation, import and exporting artwork, authenticating artwork and commercial exhibiting, and other investment management and services provided for trading artwork. It is explicitly stipulated that selling artwork via online trading platform is also subject to the new rules. Companies that are engaged in artwork business need to complete the record-filing procedures with the local MOC within 15 days after they obtain the business license. The artwork trading company should conduct due diligence on the art pieces provided by the authors upon their buyers’ requests.


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