China Regulatory Brief: Hong Kong-Shenzhen Stock Connect Tax Policies Clarified and Breastfeeding Leave Law Passed in Tianjin

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Tax policies for the Shenzhen-Hong Kong Stock connect program clarified

The Ministry of Finance (MOF), the State Administration of Taxation (SAT), and China Securities Regulatory Commission issued a notice clarifying tax policies for the Hong Kong-Shenzhen stock connect (Cai Shui [2016] No. 127), which will become effective on December 5, 2016. It touched on areas such as applied income tax for investment by Chinese nationals made in Hong Kong listed stocks, and Hong Kong nationals’ investment in stocks listed in Shenzhen. It also clarified the VAT and stamp duty policies concerning the Hong Kong-Shenzhen stock connect program. The notice stipulated that during the period from December 5, 2016 to December 4, 2019, the income of Chinese nationals deriving from price differences of the transacted shares listed in Hong Kong will be exempt from individual income tax (IIT).

VAT application of several services clarified

The SAT has issued an announcement clarifying taxation of various services (Announcement, [2016].No. 69). It specially states that, for taxpayers who provide construction services, if a down payment and security deposit is deducted by the project contract from the payable construction cost, and is not invoiced, the date on which the taxpayer receives the down payment and security deposit will be considered the starting point from when the VAT liability arises. It also clarifies several services applicable for VAT, including overseas construction services, overseas tourism services, international shipment services, rental services of apartment hotels, examination services for overseas units, visa agency services, agency business for imported goods exempted from VAT, and the accommodation industry, in which VAT invoices are issued directly by taxpayers.

Professional Service_CB icons_2015RELATED: Tax and Compliance Services from Dezan Shira & Associates

Campaign to promote supply-side structural reform and boost consumption planned

13 departments, including the Ministry of Commerce, the State Development and Reform Commission, the Ministry of Finance, the General Administration of Customs, and SAT jointly issued plans for a campaign to speed up innovation of domestic trade distribution, promote supply-side structural reform, and boost consumption (Shang Zhi Fa[2016] No. 427). It suggested that efforts should be made to expand and open up the service industry. A negative list and a management model of national treatment will be implemented over the trade and commerce logistics invested in by foreign companies. Policy allowing head offices and branches to pay VAT and EIT together will be further consolidated. It also details how port entry duty-free stores that have been approved by the State Council should be established in order to encourage direct sale of imported commodities.

Tianjin passes breastfeeding leave law

The Tianjin Municipal People’s Congress has passed a law guaranteeing the rights and interests of women who have recently taken maternity leave. Effective as of March 1, 2017, if a female employee encounters any difficulty after the end of maternity leave, she may apply to her employer to grant paid breastfeeding leave for up to six months. If an agreement regarding salary is not reached, 80 percent of the employee’s basic wage will be paid. The law emphasizes that taking breastfeeding leave does not affect employees’ promotion, wage adjustment, or their total length of service.


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.

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China Announces 2017 Official Holiday Schedule

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On December 1, China’s General Office of the State Council released the “Notification of Holiday Arrangements in 2017 (Guobanfamingdian [2016] No.17)”, which lays out the official national holiday schedule for 2017. China’s official holiday schedule for 2017 is as follows:

New Year
  • December 31 – January 2 (3 days in total including the weekend)
Spring Festival
  • January 27 – February 2 (7 days in total)
  • January 22 (Sunday) and February 4 (Saturday) are official working days.
Tomb Sweeping Day
  • April 2-4 (3 days in total)
  • April 1 is (Saturday) is an official working day.
Labor Day
  • May 1 (3 days in total including the weekend)
Dragon Boat Festival
  • May 28-30 (3 days in total)
  • May 27 (Saturday) is an official working day.
Mid-Autumn Festival and National Day
  • October 1-8 (8 days in total)
  • September 30 (Saturday) is an official working day.

*Mid-Autumn Festival falls in the same week as National Day this year, and are linked consecutively.

2017 China holiday calendar

It is important to note that the above dates are the official holidays, but private companies have the right to determine their own schedules as long as the official holidays above are maintained.


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.

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Electronic Chops: Unauthorized Use and Legal Risk Management

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A company seal, or ‘chop’, is an important component of doing business in China, as it is integral to the administration of a company and the key to legally authorize documentation. This essentially means that whoever is in possession of the company chop holds ultimate authority over a company. An electronic chop is the digital version of its physical counterpart, and can be used for online transactions, including financial and contractual ones. For this reason, the misuse of electronic chops is a common issue met by many companies in China, which can have severe financial and legal implications.

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Dezan Shira & Associates Partners planning new adventures. From left to right: Alberto Vettoretti, Sabrina Zhang, Chris Devonshire-Ellis, Rohit Kapur, Adam Livermore.

The Dezan Shira & Associates equity partners have been holding their annual partners meetings in Sri Lanka these past few days, focusing on their planning, strategy, and budgeting sessions for the year ahead. The firm is one of the largest consulting practices in Asia, providing legal, tax, and related advice to foreign SMEs and MNCs investing in China, India, and Southeast Asia. With the Dezan Shira Asian Alliance, the practice includes some 28 offices across 10 countries and about 600 staff.

The practice was founded in Hong Kong and Shenzhen, China in 1992, and was one of the earliest professional services firms in the China market. In China, its offices now include offices in Beijing, Dalian, Dongguan, Guangzhou, Hangzhou, Ningbo, Qingdao, Shanghai, Suzhou, Tianjin, and Zhongshan. The practice has also been operating in India since 2005, Vietnam since 2006, and Singapore since 2007, with additional full service alliance offices in Indonesia, Malaysia, the Philippines, and Thailand. The firm is unique both due to its size, private ownership, and the fact that it is one of the few remaining professional services firms to have retained its independence, and remains self-financed and managed. Next year is the 25th anniversary of the practice.

“We have enjoyed a productive and profitable 2016 under difficult trading conditions” comments Chris Devonshire-Ellis, the Founding Partner and Chairman, “and we have an aggressive 2017 plan to develop our business interests in India and the China-India and China-ASEAN trade corridors in particular. We are also branching out into the Silk Road arena and will be launching Silk Road Briefing as an investment intelligence platform dealing with China’s ODI into the One Belt One Road project at the end of Q1 next year, as well as boosting our marketing presence in the United States and EU during 2017. We continue to expand further into Asia including Central Asia, and are one of the very few firms who have the capability to offer pan-Asian, multi-jurisdictional services.”

Dezan Shira is also well known for its wholly owned publishing and regional intelligence division, Asia Briefing, which includes China Briefing, as well as similar platforms for ASEANIndia, Indonesia, Russia, and Vietnam.

“We continue to enjoy running and developing the practice” says Devonshire-Ellis “and are looking forward to our 25th anniversary next year and further adventures to come.”


About
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China Market Watch: Industry Profit Increase and China-New Zealand Organic Food Agreement

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China’s National Bureau of Statistics has reported that profits of the country’s industrial sector had risen in the month of October to 9.8 percent, up from 7.7 percent in September, due to sales revenue growth, rising producer prices, and strong profit growth in the coal, chemical, and technical equipment sectors. October’s producer price index (PPI) also saw an increase of 1.2 percent year-on-year, up 0.1 percent on September’s figures, and are expected to remain positive in the coming months. China’s industry profits have made a strong recovery this year after declining last year, partially due to a rise in commodity prices as a consequence of tightened supply under the government’s capacity reduction scheme. However, this growth has been derived mainly from heavy polluting industries.

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