China Regulatory Brief: Foreign Trade Development Plan Released and China-Canada Social Security Agreement Reached

Plan to develop foreign trade throughout 13th Five Year Plan released

The Ministry of Commerce (MOC) has issued a plan consisting of eight tasks to develop foreign trade during the 13th Five Year Plan period. The plan emphasizes collaborating with competent companies to extend the industry chain, conduct transnational mergers and acquisitions, gain brand advantage as well as core technology and marketing channels, and improve operations to meet international standards. It also espouses the promotion and development of an “Online Silk Road” economic cooperation pilot zone, noting that e-business among the countries and regions within the “One Belt and One Road” should be improved. Financial leasing is an important aspect, and the plan notes that financial leasing enterprises will be encouraged to conduct financial leasing for imported equipment. Competent enterprises are encouraged to carry out overseas resource and energy development as well as the processing, production and import of products that are needed in China.

Rules on filing for private placement of foreign enterprises released

The Asset Management Association of China has issued instructions for completing registration forms and archival filing by foreign and joint venture private equity fund managers. The instructions clarify special requirements for foreign-funded or joint venture organizations engaging in the raising of private capital in China and investing in China’s capital market. This is in addition to general regulatory rules already applied to China’s domestic private equity fund managers. The document details that applicants of foreign-funded private equity fund managers should make independent investment decisions, and will not be able to issue transaction directives through overseas organizations or systems. All system terminals should be installed in China, with all transaction routes transparent and traceable, and transaction data complete and ready for inspection.

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Preferential VAT policies for R&D and manufacture of large passenger planes clarified

The Ministry of Finance (MOF) and State Administration of Taxation (SAT) have jointly issued a notice regarding VAT policies for Large Passenger Planes and Regional Airliners (Cai Shui [2016] No. 141). According to the Notice, VAT carryover of the taxpayers engaging in the research and manufacturing of large passenger planes and large passenger planes engine will be refunded. VAT of taxpayers engaging in manufacturing and sales of new regional airliners will be temporarily levied at a reduced rate of five percent, and VAT carryover arising from manufacture and sales of new regional airliners will be refunded. The Real Estate Tax and Urban Land Use Tax on the self-used buildings for research, production, and office and the land of the enterprises and their wholly owned subsidiaries that engage in design and manufacturing of large passenger planes and engines of large passenger planes in China shall be exempt.

China-Canada social security agreement to be implemented

The Chinese government and the Canadian government have come to an effective agreement on social security. To guarantee the implementation of the Agreement, the Ministry of Human Resources and Social Security (MOHRSS) has issued a notice to clarify the scope and procedures for mutual exemption of social security premiums. Exempted insurance types include: China’s employee basic pension insurance and basic insurance for urban and rural residents; Canada’s Old Age Security Act and laws and regulations enacted regarding this act, and the Canadian Pension Plan and related laws and regulations. For dispatch employees, the exemption period is up to 72 months. If surpassing 72 months, the exemption period can be extended with the approval of the competent departments or the handling departments of China and Canada.

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