Tax & Accounting

Environmental Protection Tax in China

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By Ana Cicenia

On January 1, 2018, the Chinese government implemented a new environmental tax policy, effectively ending the pollutant discharge fee that had been in effect for the past 40 years.

The Environmental Protection Tax marks the beginning of a slew of new policies aimed at getting China’s pollution under control and will undoubtedly affect businesses, especially manufacturing firms, albeit in varying ways.

While the ultimate impact that the tax will have in addressing China’s pollution issues is unclear, businesses in the country should prepare themselves for more stringent enforcement of both new and existing environmental laws and regulations.

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Withholding Tax Deferral for Foreign Investment in China

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By Paul Dwyer, Director, Head of International Tax and Transfer Pricing

On December 21 2017, authorities clarified the criteria for withholding tax (WHT) deferral treatment on dividends for foreign investment in encouraged sectors in China. The Notice Regarding the Provisional Deferral Treatment for Withholding Tax on Distributed Profits used for Direct Re-investment by Foreign Investors (Caishui [2017] No.88, or Circular 88) subsequently came into effect on January 1, 2018.

Released by the Ministry of Finance (MOF), State Administration of Taxation (SAT), National Development and Reform Commission (NDRC), and Ministry of Commerce (MOFCOMMOC), the WHT deferral treatment should be welcomed by foreign investors. The treatment will help foreign investors with long-term development by encouraging continued investment in China.

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Chinese Accounting Standards

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By Dezan Shira & Associates

One of the most challenging tasks for foreign investors in China is to fully understand the financial statements prepared for their entities. The Chinese Accounting Standards (CAS, i.e., the Chinese Generally Accepted Accounting Principles) framework is based on two standards:

  • Accounting Standards for Business Enterprises (ASBEs); and
    • Accounting Standards for Small Business Enterprises (ASSBEs).

Multinational corporate groups would normally carry out reconciliations between the CAS and International Financial Reporting Standards (IFRS) or US GAAP for the purpose of consolidation of financial statements on a group level.

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Shenzhen Businesses: Register Tax Personnel by February 28

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By Alexander Chipman Koty and Zhou Qian

Shenzhen has implemented a new rule requiring all businesses in the city to register key tax personnel with the local tax bureau. The move aims to enhance businesses’ commitment to comply with tax-related laws by registering and verifying the individual personnel responsible for such issues.

Tax authorities in Shenzhen implemented the rule for newly set up companies as of July 1, 2017, and then expanded them in November to include all taxpayers. Guangdong province, as well as many other regions in China, began implementing this rule in 2016, but Shenzhen was excluded from the initial rollout.

The originally determined deadline for businesses in Shenzhen to register their real name authentication has been postponed from December 31, 2017 to February 28, 2018. Despite the change in deadline, businesses that have not yet done so are advised to register as soon as possible to avoid disruption of tax-related business activities. Businesses located elsewhere in China should ensure that they are up to date with the implementation of the rule at the local level.

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Corporate Income Tax in China

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By Dezan Shira & Associates

CB-China’s tax system[76340]

 

The fundamental regulations on China’s corporate income tax (CIT) are the CIT Law and its Implementation Guidelines. Both regulations were most recently updated in 2007 and entered into force on January 1, 2008.

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Managing China’s Financial System – New Issue of China Briefing Magazine

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Managing-China's-Financial-System-coverThe latest issue of China Briefing Magazine, titled “Managing China’s Financial System“, is out now and currently available to subscribers as a complimentary download from the Asia Briefing Publication Store.

In this issue:

  • Why do Foreign Investors think China’s Financial System is Complex?
  • How to Manage Complexities within China’s Tax Regime
  • Pre-investment Capital Planning for China’s Foreign Exchange Control
  • Transfer Pricing Regulations in China

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How China Taxes International Sport Events and Foreign Athletes

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By Ines Liu

More and more high-level sporting events are being held in China. This year, the NHL and the NBA held exhibition events in China, while the country’s own sporting events – such as the Shanghai Masters tennis tournament and the Formula 1 Chinese Grand Prix – are gaining more prestige internationally. Beijing will hold the Olympic Winter Games in 2022 after successfully hosting the Summer Games in 2008.

Besides these high-profile events, there are innumerable smaller ones being held across the country. These events, however, are subject to unique tax treatment in China. This article explores the tax requirements of foreign sporting events companies and the taxation of foreign athletes in China.

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Calculating Value-Added Tax in China

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By Dezan Shira & Associates
Editors: Ramya Bodupalli and Zhou Qian

China’s value-added tax (VAT) reform is the largest tax overhaul in the country since 1994. The reform began as a Shanghai-based pilot program – a popular method for incubating reforms in the country – in 2012 before expanding to other cities and nationwide to all sectors in 2016.

In short, the reform replaced the Business Tax (BT) – which previously coexisted alongside VAT, and applied to a select number of industries – with the VAT. After VAT reform, authorities treated the sale of goods and services alike, eliminating the disproportionate taxation of services and simplifying China’s tax system

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