New Issue of China Briefing: Employment Overheads in China’s Social Security System

Sept. 1 – In the September issue of China Briefing we look at China’s social security regime and the five social insurance funds that enterprises in China must contribute to: pension, medical insurance, unemployment insurance, maternity insurance, and occupational injury insurance.

We also look at the housing fund, another mandatory fund that both employers and employees contribute to. Because mandatory benefit requirements change from city to city, we compare and contrast 20 cities around China, introducing the proportions of salary that need to be contributed to social insurance in Dalian, Qingdao, Beijing, Shanghai, Hangzhou, Ningbo, Shenzhen, Guangzhou, Zhongshan, Dongguan, Shenyang, Tianjin, Chengdu, Suzhou, Xi’An, Changchun, Nanjing, Jinan, Kunming and Zhengzhou.

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SAT Clarifies Offset of Accumulative Losses after Cancellation of Consolidated CIT Payments

Aug. 31 – The State Administration of Taxation recently released a notice regarding the handling of corporate income tax on the accumulative loss of the previous years after the cancellation of consolidated payments, effective from January 1, 2009.

According to the notice, after canceling consolidated payments of CIT, a corporate group is allowed to allocate the accumulative loss until the end of 2008, which falls into the five-year carry-forward time-limit as stipulated by Article 18 of the CIT law. Read the rest of this entry »

SAT Clarifies Treatment of Land Appreciation Tax on Transfer of Certain Infrastructure

Aug. 30 – The State Administration of Taxation issued a tax circular late last month affirming that the transfer of certain infrastructure constructed on a piece of land is subject to land appreciation tax.

Issued in response to a request from the Xiamen municipal tax bureau, Guoshuihan [2010] No. 347 clarifies the treatment of land appreciation tax on the transfer of infrastructure, including pier parking lots and airport runways. Read the rest of this entry »

Guangdong Gov’t Accelerates Financial High-tech Service Industry

Aug. 26 – The Guangdong provincial government approved a plan to create a new financial services investment park last week aimed at accelerating the financial high-tech service industry in the province.

According to the plan issued on August 17, the government will build a financial services industrial park that will feature R&D centers, data processing centers, call centers, disaster recovery centers, training centers, and insurance asset management centers to support the business. Read the rest of this entry »

CBRC Releases Regulation on Financial Cooperation Business

Aug. 24 – China Banking Regulatory Commission recently released a regulation on financial cooperation business, aiming to better regulate banking credit and financial cooperation.

Yinjianfa [2010] No. 72, issued on August 10, states that the CBRC should further regulate the financing of bank credit and financial cooperative business in fund companies. Specifically, the balance of the financing business cannot exceed 30 percent of bank credit for financial cooperation. Read the rest of this entry »

China’s Central Bank May Allow Further Foreign Investment in Local Markets

Aug. 20 – The People’s Bank of China issued a new circular on Tuesday allowing overseas RMB settlement banks and other institutions to enter the domestic interbank bond market in a pilot program targeting increased foreign investment.

The circular also clarifies the specific ways in which overseas institutions can engage in bond investments in the interbank bond market. The new rule is to provide an investment channel for overseas institutions that hold RMB-denominated assets, along with the expansion of China’s RMB cross-border trade settlements, according to a statement posted on the People’s Bank of China web site. Read the rest of this entry »

SAT Releases Notice on VAT Input Tax Deductions in Fund Projects

Aug. 19 – The State Administration of Taxation recently released a notice regarding several issues on VAT input tax deductions in financing fund projects, effective October 1, 2010.

Issued August 9, the notice stipulates that special VAT invoices and other deductible documents, acquired during the construction period of the projects funded by the trust capital, can be used in tax deduction in accordance with the relevant provisions of the current VAT in effect. Read the rest of this entry »

The Tax Liabilities of China Business Trips

Aug. 13 – Individuals sent to China on business for a cumulative period of time that exceeds 90 days may be liable for individual income tax in China, regardless of if they entered China on a business visa (F) or an employment visa (Z).

The SAT uses the so-called 90 or 183 day rule to determine whether a foreigner in China is required to pay IIT. For residents of countries that have signed a double tax treaty with China, an individual will be taxed if they spend more than 183 days in China in a calendar year. They will have to pay IIT in China based on the days they effectively spent in the country; if they spent 184 days within a calendar year, than they will have to pay taxes on all income sourced from China. Read the rest of this entry »

China Exempts Outsourcing Companies from Business Tax

Aug. 12 – The Chinese government announced on Wednesday that it will exempt offshore service outsourcing companies from business tax in 21 of its major cities from July 1 of this year through to the end of 2013.

The announcement comes as Beijing pushes to promote growth in China’s outsourcing industry to compete with other countries in the region. The 5 percent tax exemption will cover revenue derived from business process outsourcing, information technology outsourcing, and knowledge process outsourcing services, according to a statement released jointly by the nation’s tax, commerce, and finance ministries. Read the rest of this entry »

Guangdong Gov’t Clarifies Tax Exemptions on VAT General Taxpayers

Aug. 12 – The Guangdong provincial government recently clarified a number of issues regarding tax exemptions on VAT general taxpayers.

Issued on August 6, Yueguoshuihan [2010] No. 513 stipulates that for general VAT taxpayers who currently engage in duty-free and other tax-exempted projects and cannot accurately calculate the amount of input tax which can be deducted, the tax authorities can adopt the annual liquidation measures for the tax deduction in accordance with the relevant regulations. Read the rest of this entry »

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