Work permit renewal policy updated
As of February 28, 2018, foreign companies must submit work permit renewal applications for their foreign workers at least 30 days before his or her work permit expires, according to a notice from SAFEA. If the company misses the deadline to renew the work permit, the company will need to follow the procedures for applying for a new work permit.
Given that it takes about 15 work days to renew a work permit and seven work days to renew a residence permit, as well as another five work days if that company has not yet registered on the online system, companies are advised to being the renewal process 60-90 days before the work permit’s expiry date. To renew a work permit, the company must provide the labor bureau with a renewal application form along with the employee’s labor contract, passport, residence permit, and current work permit.
Tax incentives for advanced technology service enterprises rolled out nationwide
The Ministry of Finance (MOF), the State Administration of Taxation (SAT), the Ministry of Commerce (MOFCOM), the Ministry of Science and Technology, and the National Development and Reform Committee (NDRC) jointly released a circular on November 2, 2017, to formally roll out the tax incentives for advanced technology service enterprises (ATSE) nationwide.
According to the circular, corporate income tax (CIT) for a qualified ATSE will be calculated at the preferential tax rate of 15 percent, instead of the standard 25 percent rate. Employee education expenses incurred by a qualified ATSE can also be deducted from taxable corporate income, for up to eight percent of the ATSE’s total salary and wage expenses. Further, the portion exceeding eight percent may be carried to the following tax years for CIT deduction.
Withholding tax on China-sourced income of non-resident enterprises clarified
The State Administration of Taxation (SAT) released an announcement on the administration of withholding tax on China-sourced income derived by non-resident enterprises on October 27, 2017 (“the Announcement”). The Announcement further clarifies matters concerning the withholding of corporate income tax (CIT).
According to the Announcement, the administrative burden of the withholding agents will be reduced. The withholding agent will no longer be required to submit contracts to the tax bureaus for record-filing within 30 days after a contract is signed or amended. Further, the current tax settlement requirement of 15 days prior notice to the last payment is now abolished. The required materials to submit tax returns to the tax bureaus were also simplified.
China to adjust registration management for drugs and medical devices
To promote the adjustment of industrial structure and technological innovation in the drug and medical device sector, the Communist Party of China’s Central Committee and the State Council jointly released a guideline on the reform of the review and approval system, which came into effect on October 8, 2017.
The guideline lays out several primary objectives. These include overhauling the management of clinical trials, accelerating the drug and medical device approval process, promoting drug innovation and the development of generic drugs, enhancing the administration of drug and medical devices throughout the product life cycles, and improving technical review infrastructure for greater transparency and oversight.
Notably, the guideline stipulates that qualified overseas clinical trial data can now be used in the drug and medical device registration and approval process. In the face of a grave threat to public health, drug and medical device registration approvals shall be fast-tracked. In addition, a rare disease catalogue will be set up and new products that can treat these rare diseases could be eligible for reduced trials.
US requests China not to implement Cybersecurity Law
The US has requested China not to implement its controversial new Cybersecurity Law, according to a document published by the World Trade Organization (WTO) on September 26. Many foreign governments and business organizations have also expressed unease at the law, in force since June 1 this year, due to its data localization provisions, restrictions on the cross-border flow of information, and government security reviews.
While the Cyberspace Administration of China (CAC) did not delay implementation of the law, it gave businesses a grace period lasting until December 31, 2018 to comply with the cross-border data flow requirements.
12 national departments jointly launch campaign on IP protection for foreign enterprises
12 national departments, including the State Intellectual Property Office (SIPO), the Ministry of Public Security (SPB), the Ministry of Commerce (MOFCOM), the General Administration of Customs (GAC), the State Administration of Industry and Commerce (SAIC), and the Supreme Court and the Supreme Procuratorate have issued a joint action plan to protect intellectual property (IP) held by foreign businesses.
According to the action plan, the authorities will conduct a special operation from September to December 2017 to crack down on the theft of trade secrets, trademark infringement, patent violations, and online property rights violations.
Interpretation IV on Company Law enhances shareholder protection
China’s Supreme Court issued the fourth judicial interpretation of the PRC Company Law (“the Interpretation”) at a press conference on August 28 to further standardize company governance, and enhance protection to the minority shareholders and creditors, with effect from September 1, 2017.
The Interpretation offers great practical and instructive guidance to the law application issues in disputes over the validity of company resolutions, shareholders’ right to know, profit distribution, preemptive right, and shareholder representative action.
China initiates a three-month campaign to combat pyramid schemes
The government launched a three-month campaign against pyramid selling after the death of a Chinese university graduate in Tianjin caused by involvement in a pyramid scheme.
China’s State Administration of Industry and Commerce (SAIC), along with the Ministry of Public Security and the Ministry of Education will work together to investigate recruitment methods multi-level marketing firms use to target graduates and new job seekers. Violating networks and entities engaged in such activities will be disbanded and charged.
Pyramid selling schemes have increased over the last few years mainly through social networks, with over 20,000 cases investigated by the Chinese police over the 10 year period from 2005 to 2015. The authorities seized RMB 990 million (US$148 million) over the course of the inquiry. In 2016, 2,826 cases were investigated, an increase of 19.1 percent from the previous year.