China Regulatory Brief: Clarified Rules on FIE Annual Reporting & VAT Expanded to Telecom Sector

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China Clarifies Issues Concerning FIE Annual Reporting on Foreign Exchange Operations

The General Affairs Department of the State Administration of Foreign Exchange (SAFE) recently released the “Circular on Issues Concerning Foreign-invested Enterprise (FIE) Annual Reporting on Foreign Exchange Operations in 2014 (Hui Zong Fa [2014] No. 58).” According to the Circular, if the sole foreign-investor in an FIE is a domestic investment company, it will be exempt from submitting annual reports; FIEs jointly funded by domestic investment companies and foreign investors should report their foreign exchange operations via the Capital Account Information System to the local SAFE where the FIE is located. The declaration period began on May 12, 2014 and will last until August 31, 2014.

Exemption Granted on Disposal Funds for Waste Electronic Goods

The Ministry of Finance (MOF), the State Administration of Taxation (SAT), and the General Administration of Customs (GAC) jointly released an announcement concerning exemptions granted on contributions to the waste electronic goods disposal fund. Generally, manufacturers of electronic goods in China are required to contribute to a state-managed fund for disposing waste electronic goods, with the exception of manufacturers that produce electronic goods for export. This announcement clarifies that manufacturers that are entrusted by foreign trading companies to process electronic goods with supplied or imported materials, and deliver these goods to the foreign trading companies for re-export, are exempt from contributing to this fund. The Announcement took effect on June 1, 2014.

China Increases Prices on Domestic Refined Oil

On May 23, the National Development and Reform Commission (NDRC) released the “Circular on Increasing the Price of Domestic Refined Oil (Fa Gai Dian [2014] No. 139).” According to the Circular, the prices of gasoline and diesel are to be increased by RMB 70 per ton, and the adjusted retail prices of gasoline and diesel by RMB 8,815 and RMB 7,695 per ton, respectively. Meanwhile, the maximum supply prices of gasoline and diesel for traffic, aviation and other special uses of gasoline and diesel have been adjusted by an equal amount. The Circular came into effect on May 24, 2014.

China to Levy VAT on the Telecom Sector Starting June 1

To further promote China’s value-added tax (VAT) pilot reforms, the State Administration of Taxation (SAT) recently released the “Provisional Measures for the Administration of VAT Collection from Telecom Enterprises” (SAT [2014] No. 26, ‘Measures’) and the “Announcement on Including the Telecom Industry in the VAT Pilot Reforms” (Cai Shui [2014] No. 43, ‘Announcement’). According to these documents, the telecom industry will be subject to VAT, rather than business tax (BT), from June 1, 2014.

State Council Issues Low Carbon Development 2014-2015 Action Plan

To strengthen energy conservation and reduce greenhouse gas emissions, China’s State Council has issued a Low Carbon Development 2014-2015 Action Plan. The Plan introduces changes to the taxation of natural resources and is a step toward the development of a national carbon market. Targets set in the Plan include a reduction in carbon emissions of at least 4 percent in 2014 and 3.5 percent in 2015 through a combination of industrial restructuring, energy-saving construction projects, upgraded coal-fired boilers, and motor vehicle emission reductions.

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