China Regulatory Brief: Draft Foreign Investment Law, Tourist VAT Rebates

January 26, 2015 Posted by China Briefing Reading Time: 4 minutes

China Releases Draft Foreign Investment Law

On January 19, the Chinese Ministry of Commerce (MOFCOM) released the draft of the proposed new Foreign Investment Law to solicit public comments by February 17, 2015. According to the draft, the State Council will publish a negative list of industries in which foreign investment is restricted or prohibited. It is stipulated that most foreign investment, including setting up a new company, will no longer need pre-approval from the State Council unless a foreign party intends to invest in one of the restricted industries on the negative list. In addition, the proposed new law will repeal the Sino-foreign Equity Joint Venture Law, the Wholly Foreign-owned Enterprise Law and the Sino-foreign Contractual Joint Venture Law.

China Expands Tourist VAT Rebate Scheme Nationwide

On January 6, the Ministry of Finance (MOF) released the “Announcement on Implementing Tourist VAT Rebate on Departure Policy to Foreign Tourists (MOF Announcement [2015] No.3),” which took immediate effect. According to the Announcement, foreign tourists (defined foreigners who stay in China for less than 183 days) purchasing goods in certain areas are able to apply for value-added tax (VAT) refunds at the rate of 11 percent. The threshold for VAT refunds is set at RMB 500. In 2011, China launched this policy as a pilot scheme in Hainan. The country is currently looking to expand the tax rebates policy nationwide to boost its domestic tourism industry.

China Plans to Build Beijing-Moscow High-speed Railway

The Chinese government recently announced its plan to build the country’s first high-speed rail link between Beijing and Moscow. The proposed cross-border high-speed rail will run for more than 7,000 kilometers from China through Kazakhstan and arrive in Russia. The railway cuts transport time between the two cities to two days. Currently, it takes six days to travel from Beijing to Moscow by train. China may invest approximately RMB 1.5 trillion (US$242 billion) into the construction of the new line. The new line was proposed in October, 2014 during Chinese Premier Li Keqiang’s visit to Russia.

UK Signs MoU with Yihaodian

On January 15, the UK Department of Trade & Investment (UKTI) and China Britain Business Council (CBBC) jointly signed a memorandum of understanding (MoU) with Yihaodian after a visit to its headquarters in Pudong. Yihaodian is a Chinese online grocery business, partially owned by the retail giant Walmart. Yihaodian owns China’s biggest B2C online platform selling imported food and started cross-border e-commerce business since 2013. The MoU was signed to conclude negotiations over exporting more high-quality agricultural products, especially frozen meat and dairy products, from the UK to China. The CBBC has brought over 800 imported products of over 70 brands into China and is now looking forward to the cooperation with Yihaodian, said Stephen Philips, the chief executive of the CBBC.

About Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

‍

Tax, Accounting, and Audit in China 2015
This edition of Tax, Accounting, and Audit in China, updated for 2015, offers a comprehensive overview of the major taxes 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 operations.

Adapting Your China WFOE to Service China’s Consumers
In this issue of China Briefing Magazine, we look at the challenges posed to manufacturers amidst China’s rising labor costs and stricter environmental regulations. Manufacturing WFOEs in China should adapt by expanding their business scope to include distribution and determine suitable supply chain solutions. In this regard, we will take a look at the opportunities in China’s domestic consumer market and forecast the sectors that are set to boom in the coming years.

E-Commerce in China
In this issue of China Briefing Magazine, we cover the current laws pertinent to the e-commerce industry in China, as well as introduce the steps involved in setting up an online shop in the country in order to help provide foreign investors with an overview of the e-commerce landscape in China.