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China Briefing is a monthly magazine and daily news service about doing business in China. We cover topics relating to the Chinese economy, the market in China, foreign direct investment and Chinese law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates




Legal and Regulatory

China Clarifies IIT Rules Regarding Share Capital Increase after Equity Acquisition

May 24 – China’s State Administration of Taxation (SAT) promulgated the “Announcement on Issues Concerning Individual Income Tax (IIT) on Individual Investors’ Post-Equity Acquisition Increase of Share Capital Converted from the Previously Accumulated Surplus of the Enterprise” (SAT Announcement [2013] No. 23, hereinafter referred to as “Announcement 23”) on May 7, 2013, which will enter into force on June 7, 2013.

The purpose of Announcement 23 is to clarify the IIT liability of individual investors who acquire 100 percent equity from an enterprise and then convert the enterprise’s accumulated surplus into share capital after the transaction. Continue reading

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China Issues Announcement on Value-added Tax Declaration

May 24 – China’s State Administration of Taxation (SAT) released the “Announcement on Issues Concerning the Declaration of Value-Added Tax by Head offices and Branches under Pilot Collection of Value-Added Tax in Lieu of Business Tax (Announcement [2013] No.22, hereinafter referred to as ‘Announcement’)” on May 7, which is scheduled to take effect on June 1, 2013. Detailed information can be found below. Continue reading

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China’s First National Mental Health Law Takes Effect

May 23 – China’s first national Mental Health Law (hereinafter referred to as the ‘Law’), which has taken almost 27 years to draft, came into effect on May 1, 2013.  The Law for the first time explicitly forbids the involuntary confinement of individuals with mental disorders, and offers greater protection to employees suffering from such disorders. Detailed information can be found below. Continue reading

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China’s New ‘Good Supply Practice of Pharmaceutical Products’ to Take Effect

May 22 – China’s “Good Supply Practice of Pharmaceutical Products,” issued in 2000, has played an important role in regulating pharmaceutical operation activities and ensuring drug quality and safety over the past decade. However, with the country’s rapid economic and social development in recent years, some provisions of the current Good Supply Practice of Pharmaceutical Products have fallen behind the times, and are therefore hindering the healthy development of the pharmaceutical industry.

In response, China’s State Food and Drug Administration (SFDA) started revising the Good Supply Practice of Pharmaceutical Products in 2009 and now, after three rounds of public consultation, China’s Ministry of Health (MOH) at last released the newly-revised “Good Supply Practice of Pharmaceutical Products (MOH Decree No. 90, hereinafter referred to as ‘Revised GSP Standards’)” on January 22, which is scheduled to take effect on June 1, 2013. Continue reading

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China Releases Administrative Measures on Foreign Debt Registration

May 21 – China’s State Administration of Foreign Exchange (SAFE) released the “Circular on Administrative Measures for Foreign Debt Registration (huifa [2013] No.19, hereinafter referred to as ‘Circular’)” on April 28, which came into effect on May 13, 2013. Five distinct features of the Circular can be found below. Continue reading

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China Allows Private Equity Investment in Insurance Companies

May 20 – With the view to encourage private investment in the insurance industry, China’s Insurance Regulatory Commission (CIRC) released the “Circular on Relevant Issues regarding the Investment and Shareholding of Limited Partnership Equity Investment Enterprises in Insurance Companies (Baojianfa [2013] No. 36, hereinafter referred to as the ‘Circular’)” on April 24, which allows limited partnership equity investment enterprises to invest in the country’s insurance companies.

The Circular sets out the requirements for a limited partnership equity investment enterprise to invest in an insurance company and outlines the application materials required by the CIRC. The Circular applies to all Chinese insurance companies in which the shareholding of all foreign investors is less than 25 percent, as well as domestic and foreign-invested limited partnership equity investment enterprises. Detailed information can be found below. Continue reading

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China Issues Opinions on Work-Related Injury Insurance

May 17 – In order to fully implement the “Regulations on Work-Related Injury Insurance (hereinafter referred to as ‘Regulations’),” China’s Ministry of Human Resources and Social Security (MOHRSS) released the “Opinions on Certain Issues Concerning the Implementation of the Regulations on Work-Related Injury Insurance (Renshebufa [2013] No.34, hereinafter referred to as the ‘Opinions’)” on April 25, 2013, which clarifies several issues regarding the implementation of the Regulations. Detailed information can be found below. Continue reading

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Update: Catalogue of Priority Industries for Foreign Investment in Central and Western China

May 16 – China’s National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOC) jointly released the “Catalogue of Priority Industries for Foreign Investment in Central and Western China (hereinafter referred to as the ‘Catalogue’)” on May 14, which is scheduled to take effect on June 10, 2013. The Catalogue replaces its predecessor issued in 2008, and adds 173 categories to the original list.

According to the “Provisions on Guiding Foreign Investment,” foreign-invested projects included in the Catalogue are entitled to the preferential policies granted for the foreign-invested projects under the encouraged category. The Catalogue is organized by province, covering 22 out of the 31 provincial-level administrative regions in Mainland China. Selected industries for each provincial-level region can be found below. Continue reading

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