Sept. 3 - Proposals to restructure the national application of China’s most important collectable tax, the value-added tax, have been put forward to the State Council and are expected to be implemented shortly.

Two measures immediately stand out:

1. VAT, which has not yet been levied on services, is to be attached to service contracts and invoices, meaning all service businesses in China can now both levy and offset VAT
2. VAT has not yet been fully able to have been offset against certain purchases, such as equipment purchases; the proposals call for VAT to be offset against all transactions (more…)

Sept. 2 - Several senior mainland legislators called for national tax cuts to be realized at the fourth session of the NPC on Friday, recommending that monthly individual income tax barriers be raised.

Currently, workers in China pay income taxes on everything earned above RMB2,000 a month. Zheng Gongcheng, an NPC Standing Committee Member and noted academic on labor issues said that the mainland’s individual income tax threshold was too low, resulting in lower income workers unfairly carrying the burden as the main source of personal income tax revenue. He also pointed to the fact that low income workers have seen the prices of commodities such as pork rise considerably the past 12 months.

On top of the recent cuts on administrative fees for individual-owned businesses, Zheng called for a further reduction in administration costs and taxes for Chinese SMEs, especially for labor intensive manufacturing plants. (more…)

Aug. 29 - The September issue of China Briefing magazine is out now and available for download (click on the image - subscription required however this is complimentary).

In this issue we look at the development of outsourced payroll services in China. With recent legislation in labor law, and with China’s national social security and mandatory welfare payments varying regionally, managing China payroll is an increasingly complex matter. We examine the compensation of employees, both local and expatriate, social security and individual income tax considerations, and the requirements of payroll processing management in China, as well as its deliverables and the optimization of your workforce salary structure. We also continue our 3TC series, taking a look at five regional second- and third-tier cities.

Included in this issue:

Compensating employees
Salary structuring
Social security and IIT considerations
The second- and third-tier cities of Qingdao, Wuxi, Xiamen, Taiyuan, and Urumqi

Aug. 28 - Bank of Beijing is set to become the country’s first city commercial bank to expand into the fund management business in a joint venture with Canada’s Bank of Nova Scotia.

The bank is China’s largest city bank in terms of assets and will a registered capital of RMB300 million (US$44 million). On the other hand, the Bank of Nova Scotia is Canada’s third largest lender by assets.

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Aug. 25 – The Ministry of Finance announced on their website that administrative fees for individual-owned businesses and market vendors will be abolished beginning September 1.

The canceled fees will help individual business owners and urge people to start businesses of their own in the government’s bid to create more jobs for 10 million urban dwellers this year.

The administrative fees had previously charged small business owners and vendors’ service charges from local market watchdogs. It had been criticized as being too expensive costing twice the amount of business taxes and blamed for discouraging individuals to start businesses.

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BEIJING, Aug. 21 - In a sign that China is further liberalizing its banking industry, it is now possible to exchange foreign currencies at non-banking sites the Beijing Morning Post reported.

Citing the Beijing Administration Department of Foreign Exchange under the State Administration of Foreign Exchange, the paper reported that the first chartered site was established at the Beijing Capital International Airport, while trials of chartered individual domestic and foreign currency exchange business were launched in Shanghai and Beijing yesterday.

The establishment of a 24-hour chartered currency exchange sites at the airport will allow travelers arriving at the capital airport to currently exchange 16 different types of currency. (more…)

Aug. 14 – Beginning September 1, China will revise its tax rates on passenger cars to encourage the purchase of smaller-capacity, fuel-efficient engines.

The move is in accordance to a national campaign that hopes to decrease emissions and energy use from 2006 to 2010. “We hope the new policy will help restrain the production and sales of high-emission vehicles while promoting the development of low-emission cars,” the Ministry of Finance said in an online statement.

Taxes on cars with engine capacities of 3 to 4 liters will increase from 15 percent to 25 percent while those with engines of more than 4 liters will double to 40 percent. On the other hand, engines with capacities of 1 liter or less will decrease from 3 percent to 1 percent.

Aug. 11- China’s National Audit Office (NOA) has set-up two departments tasked to review state-owned companies and their overseas national assets.

These departments will examine the companies’ fiscal revenue and social security funds in addition to establishing links with other international audit organizations.

In a statement, the NOA said, “The office will also pay more attention to funds concerning key resources and energy as well as environmental protection.”

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Aug. 1 - China increased the tax rebate on textiles and garments from 11 percent to 13 percent today.

The tax relief will help textile exporters who have been hurt by slumping demand, higher costs, and the RMB rising value

This increased tax rebate is expected to boost exports, most significantly for silk, chemical fiber, wool yarn, and cotton products, China Daily reported. (more…)

July 25 - In November 2007, the Ministry of Finance and the China Appraisal Society jointly announced an asset appraisal standards system, comprising 15 appraisal standards.

The standards system comprises two parts: professional ethics standards and business standards. The business standards are classified into four categories: basic standards, detailed standards, valuation guidelines, and guiding opinions. (more…)