Legal and Regulatory

Huizhou Launches Enterprise Registration and Examination Reform

May 23 – The Huizhou government held a mobilization conference on May 17 to officially launch its enterprise registration and examination trial reform, which aims to “simplify what can be simplified; permit what can be permitted; accelerate what can be accelerated; and optimize what needs to be optimized.”

It is the first time that the Guangdong provincial government has approved the enterprise registration and examination reform to be trialed at the city-level. As a result, the Guangdong government has ordered the related departments at the provincial level to fully support and guide the trial reform in Huizhou. Continue reading →

Posted in Business, FDI and Foreign Trade, Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update, South China | Tagged China Legal, China Reform, China Regulatory, Enterprise Registration and Examination Reform, Guangdong, Huizhou, Huizhou Trial Reform, South China | Leave a comment

China Clarifies Filing Process for Foreign-Funded Venture Capital Enterprises

May 21 – In order to improve the management of foreign-funded venture capital enterprises (VCs), China’s Ministry of Commerce (MOFCOM) issued the “Ministry of Commerce Circular on Improving the Administration of Record Filing for Foreign-funded Venture Capital Enterprises (shangzihan [2-12] No.269, hereinafter referred as the “Circular”)” on May 7, clarifying the filing procedures for foreign-funded VCs. Continue reading →

Posted in Legal and Regulatory, Regulatory Update | Tagged China Filing Process, China Regulatory, China VCs, China Venture Capital, Ministry of COmmerce | Leave a comment

Severance Pay Subject to Individual Income Tax in China

May 18 – On May 14, officials from China’s State Administration of Taxation answered questions on several hot issues regarding ambiguities in tax payments, clarifying that individual income tax should be paid when an employee receives compensation for termination of their contract.

According to the government officials, if the one-time compensation offered to an employee after the termination of the contract does not exceed three times the local average annual salary of the previous year, the compensation is tax exempt. However, if the amount exceeds this threshold, then the exceeding part of the compensation is subject to individual income tax payment. Continue reading →

Posted in Business, Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update | Tagged China Tax, Individual Income Tax, Severance Pay, State Administration of Taxation | Leave a comment

Obtaining a Z Visa, Work Permit and Residence Permit in China

By Xiaolei Gu

May 17 – The Beijing Public Security Bureau announced the commencement of a three-month campaign beginning May 15 to “clean up” illegally entered/stayed/employed foreigners through its Sina Weibo account in an effort to establish a comprehensive mechanism for managing foreigners in China.

According to the Sina Weibo announcement, the Beijing Public Security Bureau will check key neighborhoods, carry out regular crackdowns in certain areas, and review visa applications more strictly and more carefully. Moreover, the Bureau also encourages public reporting of suspicious cases in the city. Continue reading →

Posted in Business, Legal and Regulatory | Tagged China Documentation, China Expats, China Immigration, China Visas, Employment Visa, Exit-Entry Administration Bureau, Residence Permit, Work Permit, Z Visa | Leave a comment

China Releases 12th Five-Year Plan for Oceanic Affairs

By Xiaolei Gu

May 16 – China’s State Oceanic Administration and the Standardization Administration of the People’s Republic of China jointly released “The 12th Five-Year Plan for the Standardization of Oceanic Affairs (hereinafter referred as the Plan)” to work out a set of standards on oceanic affairs covering ocean planning, ocean investigation, ocean energy utilization, and island development. Continue reading →

Posted in Legal and Regulatory | Tagged 12th Five-Year Plan, Island Development, Maritime, Ocean Energy Utilization, Ocean Investigation, Ocean Planning, Oceanic Affairs | Leave a comment

China Orders ‘Big Four’ Auditors to Restructure

China requires 60 percent majority Chinese partners upon JV term expiry, 80 percent by 2017.

Devonshire-Ellis: “This is a retrograde step”

May 15 – China’s Ministry of Finance, Administration for Industry and Commerce, Ministry of Commerce, State Administration of Foreign Exchange, and the China Securities Regulatory Commission jointly issued the “Scheme for Localized Transformation of Sino-foreign Cooperative Accounting Firms (hereinafter referred as the “Scheme”)” last Thursday. The Scheme requires the “Big Four” auditing companies of Deloitte Touche Tohmatsu, Ernst & Young, KPMG and PricewaterhouseCoopers to “localize” their staff in line with Chinese laws that specify the qualifications, age and experience of their management. Continue reading →

Posted in Business, Finance, Tax and Accounting, Legal and Regulatory, Regulatory Update | Tagged Accounting, Big Four, China Legal, China Regulatory, Deloitte, Ernst & Young, KPMG, PWC | 1 Comment

China FICE vs. Manufacturing WFOE

Op-Ed Commentary: Chris Devonshire-Ellis

May 11 – Foreign-invested commercial enterprises (FICE) are a relatively recent addition to the different types of legal structures available to foreign investors in China, essentially being drafted into law as a reaction to China’s joining the WTO 10 years ago. Prior to this, foreign investors had to use wholly foreign-owned enterprises (WFOEs) or joint ventures in order to trade in China – and even that sector was restricted at the time. The FICE structure enabled foreign investors to establish an entity that would provide both import and export licenses with minimal capitalization for the first time. They were introduced specifically to make it easier for foreign investors to both buy and export China-sourced products without the need for going through an agent, and in accordance with China’s WTO obligations, to allow foreign companies to develop their own sales structures and possess their own import licenses. Continue reading →

Posted in Business, FDI and Foreign Trade, Legal and Regulatory | Tagged China Legal, Corporate Establishment, FICE vs. WFOE, Manufacturing WFOE, Market Entry Vehicles, Wholly Foreign-Owned Enterprise | Leave a comment

China Announces VAT Pilot Project for Agricultural Products

May 10 – The Ministry of Finance and the State Administration of Taxation issued on April 6, 2012 the “Circular on Measures for the Pilot Project of Assessment and Deduction of Input Value-added Tax (VAT) on Agricultural Products in Certain Industries (caishui [2012] No.38, hereafter referred to as ‘Pilot Project Circular’).

The Pilot Project Circular announces that, starting from July 1, 2012, VAT general taxpayers who purchase agricultural products as raw materials for the production and sale of liquid milk and dairy products, liquor and ethyl alcohol, or vegetable oil, will be able to deduct input VAT in accordance with methods provided in the Circular. Agricultural products refer to those primary products listed in the “Explanation of Taxable Scope of Agricultural Products (caishuizi [1995] No. 52).” Continue reading →