By Jake Liddle
On July 5, 2016, the State Council issued a circular to speed up the rate of business registration reform. The decision was made to fully implement the ‘Five-in-One’ business license across China as of October 1, 2016, a departure from the previous ‘Three-in-One’ business license system which was introduced the same time last year. The Five-in-One business license was previously piloted in places such as Shenzhen and Zhejiang Province when the Three-in-One business license was first rolled out. The business registration reform is part of a broader effort to ease market access by simplifying administrative procedures.
By Ines Liu
Hong Kong entered into a Double Taxation Arrangement (DTA) with China in 2006. The treaty acts as a way to avoid double taxation and clamp down on tax evasion, improving ties between both jurisdictions by reinforcing their respective tax laws, encouraging competition, and promoting investment. A fourth protocol was signed on April 1, 2015, amending four key aspects of the DTA. One of those aspects was tax exemption for capital gains derived by foreign investors that sell shares of a China based company, which we explore in detail below.
Consumer goods quality standards upgrade plan
On September 13, 2016, the General Office of the State Council formally published the Upgrade Plan for Standards and Quality of Consumer Goods (2012-2020), which sets a clear goal for improving product quality. It plans that by 2020, the standard supply of consumer goods will satisfy growing consumer demand, and the quality of consumer goods in key areas will reach or be close to international standards. The Plan identifies nine key areas regarding quality upgrade of consumer goods, including home appliances, consumer electronics, home decoration products, clothing products, supplies for infants, the expecting, the elderly, and the disabled, cosmetics and daily chemicals, products for culture, sports, and leisure, traditional culture products, and food and other related products.
By Zolzaya Erdenebileg
China’s direct sales industry has consistently displayed exceptional growth over the last few years. Value growth in 2015 was recorded at 10 percent, partially due to 20 new entrants gaining direct sales licenses in that year, keeping the industry incredibly competitive. If growth of 10 percent is maintained, the industry is expected to see a value compact annual growth rate (CAGR) of six percent. However, sales value shares will be sapped by increasingly powerful internet retail and other types of retail channels, and so direct sales growth may decline.
The latest issue of China Briefing Magazine, titled “Revisiting Transfer Pricing in China: a Year of New Regulations“, is out now and available to subscribers as a complimentary download in the Asia Briefing Publication Store through the month of September.
- Navigating China’s New Transfer Pricing Regulations
- Understanding Transfer Pricing Methods and Compliance in China
- The Complexity of Transfer Pricing for Intercompany Services
By Patrick Schreiber
As of July 25, 2016, Chinese border control extended the Automated Passenger Clearance System service to foreigners at many frequently used border crossing points across the country. The ‘e-channel’ service has been used in Hong Kong and Macau since 2002 and limited to Mainland China, Hong Kong, and Macau identity card holders, but due to the recent increase of foreign travelers crossing between borders, the option is also available for foreigners who are in possession of an e-passport and a long term visa. The e-channel service can now be found at airport immigration points and at the Mainland China-Hong Kong border, simplifying border crossing procedures for foreign business people and long-term residents, significantly reducing crossing time.
China and The Netherlands sign social insurance deal
On September 12, 2016, the Dutch Deputy Prime Minister and Minister of Social Affairs and Employment Lodewijk Asscher and the Chinese Minister of Human Resources and Social Security Yin Weimin signed a social insurance agreement that will exempt government employees sent to either country from mandatory social insurance contributions. Three rounds of negotiations between the countries were held since initiation in November 2014, and the deal will take effect after legal procedures are completed. Prior to the agreement, Dutch nationals working in China were required to contribute towards five insurance programs according to Chinese law, which also stipulates that the social insurance personal account can only be accessed after 15 years of work. A similar scheme applies to Chinese nationals sent to The Netherlands for work. The Chinese government has similar existing agreements with Germany, South Korea, Denmark, Finland, Canada and Switzerland.
By Winnie Jin
On September 9, 2016, the State Administration of Foreign Experts Affairs’ (SAFEA) made an announcement that the existing Foreign Expert Permit and Alien Employment License will be merged into a single permit. The new permit will introduce a tiered classification system for foreign workers as well as a streamlined online application and tracking system in order to attract more high-level foreign talent.