China Regulatory Brief: CIT Policies for Non-Monetary Assets Investment, Coal Resource Tax Rates Released

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China Clarifies CIT Policies for the Investment of Non-Monetary Assets

On December 31, the Ministry of Finance and the State Administration of Taxation jointly released the “Circular on Corporate Income Tax Policies for Non-Monetary Assets Investment,” aimed at encouraging enterprises to invest non-monetary assets and thereby reduce their tax burden. The Circular clarifies that any enterprises registered in China that receive income from the investment of non-monetary assets are allowed to defer the payment of corporate income tax for five years. Notably, the regulation applies to both newly set-up companies and existing companies looking to increase their capital.

Comments Sought on Revised Tax Administration Law

On January 5, the Legislative Affairs Office of the State Council released the “Draft of Revised Tax Administration Law,” which clarified issues for the payment of e-commerce tax. The Draft explicitly stipulates that taxpayers selling products or services online should clearly display their tax registration certificates on their websites. Also, trading platforms are required to submit all the relevant registration information of their vendors to the tax bureau. Currently, Chinese legislators are researching and collecting opinions to prepare for the promulgation of the “Administrative Regulations on Online Retail.” If ratified, the Draft would be China’s first law on tax payment for online stores. The specific tax rates and tax payment rules are expected to be released later this year.

Several Provinces Release Coal Resource Tax Rates

Several provinces in China have recently released their respective coal resource tax rates, including Henan (2 percent), Hunan (2.5 percent), Guangxi (2.5 percent) and Shanxi (8 percent). The Chinese government announced plans to launch a coal reform program starting from December 2014, including a coal resource tax to be levied on an ad valorem basis – meaning that the rate will be set based on the resource price rather than quantity. These rates are set by provincial governments and would be higher in coal-dependent provinces such as Shanxi. 

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China Releases Rules for Online Sales Promotions

On January 6, China’s State Administration for Industry and Commerce (SAIC) released the draft of “Provisions for the Administration of Online Promotions for Products and Services.” The Draft stipulates that online stores may not set unreasonable rules for customers during sales promotion, such as non-refundable deposits, goods sold in advance not being eligible for unconditional return within seven days, or additional conditions for returning goods. Further, the organizers of online sales promotions should display the promotion period, rules and other relevant information on their websites in advance.


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