China Regulatory Brief: Business License Update Deadline, Tax Refund Policies in Hengqin and Pingtan

January 5, 2015 Posted by China Briefing Reading Time: 5 minutes

All Companies Required to Obtain New-Format Business Licenses Before February 28

China introduced a new business license format early last year based on the amended Company Law that went into effect in March 2014. The new licenses are issued to any company founded on or after 1 March 2014, or which has renewed its business license since that time. All companies established in China are required to switch over to the new format before 28 February 2015. While this requirement applies to most parts of China, the Beijing Administration for Industry and Commerce (BAIC) recently released an Announcement saying that it will not enforce the deadline for enterprises registered in the city.

Guangzhou Exempts Embankment Protection Fee

The Guangzhou Municipal Government recently released the “Circular on the Exemption of Certain Administrative Fees for Enterprises,” in which it was decided to abolish the city’s embankment protection fee, starting January 1. The embankment protection fee is set and levied by the local government in most parts of China to build up embankment overflow protection systems. Previously, a 0.045 percent embankment protection fee was levied on the total revenue of companies, from 1 January 2014.

China Looking to Sign Free Trade Agreement (FTA) with Bangladesh

On December 28, Chinese Foreign Minister Wang Yi announced that China aims to quickly finalize talks towards the achievement of a bilateral free trade agreement (FTA) with Bangladesh. During a meeting in Dhaka, Wang described Bangladesh an important development partner in South Asia, and noted China’s commitment to balancing trade between the two countries. The FTA is expected to drastically eliminate tariff and improve market access for both sides. In 2013, bilateral trade reached US$10.31 billion, among which, however, exports from Bangladesh to China comprised less than one-tenth of the total. If ratified, the deal would be Bangladesh’s first bilateral FTA.

China Releases VAT and Consumption Tax Refund Policies for Hengqin and Pingtan

On December 19, China’s State Administration of Taxation (SAT) released the “Announcement on Administrative Measures for VAT and Consumption Tax Refunds for Hengqin and Pingtan (SAT Announcement [2014] No.70.” According to the Announcement, the VAT and consumption tax refund policies shall apply to eligible products (including water, steam, electricity and gas) sold to Hengqin and Pingtan from other parts of China. Enterprises in Hengqin and Pingtan seeking to enjoy these policies must apply with their local tax authorities within 30 days upon their initial purchase of products from other parts of China.

Comments Sought on Provisions for Mass Layoffs

On December 31, the Ministry of Human Resources and Social Security (MHRSS) released a draft of its “Provisions for Mass Layoffs,” which applies to enterprises that are reducing their staff by more than 20 persons, or fewer than 20 persons but over 10 percent of the total number of employees. The Provisions further specified the requirements that an employer should meet and steps to follow when deciding to downsize a company. Enterprises should submit a detailed report, including severance payments and a list of the employees to be reduced, to the local MHRSS for approval prior to terminating employees.

China Eases Rules on Foreign Banks

On December 22, China’s State Council released the amended “Regulation on the Administration of Foreign Banks” to ease restrictions on the opening of branches and RMB transactions by foreign banks, and aimed at further opening up China’s domestic financial industry. The new Regulation, which took effect on January 1, stipulated that foreign banks would be eligible to apply to conduct RMB transactions after operating in China for one year. Previously, foreign banks wishing to conduct RMB transactions had to meet the requirements of operating in China for three years and making profit for two consecutive years. Further, foreign banks are no longer required to set up a representative office before they set up branches, joint ventures or wholly foreign-owned lenders.

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