China Regulatory Brief: Preliminary Approval System for Business Licenses & Adjusted 2014 Minimum Wage Levels

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China Allows Preliminary Approval for Business Licenses in Certain Industries

On August 20, China’s State Administration for Industry and Commerce (SAIC) officially launched a preliminary approval system for business licenses, meaning that eligible enterprises can apply for a business license prior to receiving administrative approval for certain projects. According to the “Catalogue of Certain Industries Eligible for Preliminary Approval of Business Licenses,” eligibility will be extended to 31 items, including coal mining approval, waste electronic equipment disposal permits, and notably, permits for setting up a foreign-invested travel agency. The preliminary approval system is expected to substantially accelerate the set-up procedure for related enterprises.

Hangzhou Adjusts its Minimum Wage Levels for 2014

On August 21, the Hangzhou Government released its monthly and hourly minimum wage levels for 2014, which took effect on August 1, 2014. Accordingly, the monthly minimum wage in Hangzhou has been adjusted to RMB 1650 from RMB 1470 (12.2 percent growth), while the hourly minimum wage has been adjusted to RMB 13.5—both are the highest in Zhejiang province.

Wenzhou Adjusts its Minimum Wage Levels for 2014

The Wenzhou Government recently released the “Circular on Adjusting Minimum Wages for 2014 (Wen Zheng Fa [2014] No.56),” which took effect on August 1, 2014. According to the Circular, monthly minimum wages in Wenzhou will be divided into three levels. The chart below shows the details of Wenzhou’s new monthly and hourly minimum wage classes:

China Reduces the CIT Rate for the Science and Technology Services Industry

On August 19, the State Council agreed to levy a reduced corporate income tax (CIT) rate of 15 percent on science and technology services companies qualifying as high-tech enterprises, in a bid to bring more private enterprises into the industry. Currently, the majority of science and technology services enterprises in China are under the operation of the Chinese government with comparatively low technical skills.

China Clarifies Scope of Work-Related Injury Insurance

On August 20, the Supreme People’s Court of China released the “Provisions on Several Issues in Work-related Injury Insurance (Fa Shi [2014] No.9),” which will take effect on September 1, 2014. The Provisions stipulates work-related injury insurance liability in five types of special labor arrangements (including labor dispatching) and clarifies four circumstances of work-related injuries incurred during the daily commute to and from work. According to the Provisions, injuries incurred while commuting during the commute caused in the activities of daily life  are also included in the scope of work-related injury insurance. For example, injuries incurred when an employee stops off at a grocery store during his/her commute shall be covered by the work-related injury insurance.

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