China Regulatory Brief: New Five Year Work Permit, Foreign Banks Allowed to Invest in Finance
China’s new five year work permit for foreign employees
China’s Ministry of Public Security has recently unveiled a new pilot program for foreign work permits, which allows anyone who has been employed for at least two consecutive years to apply for a new five year work permit. Previously, foreign nationals were required to renew their work permit every year, even if they were on a multiple year labor contract.
In addition to this, foreign nationals who have worked in the same city or province for four consecutive years, and meet other requirements regarding salary and income tax thresholds, will be eligible to apply for a permanent residence permit.
The pilot program will be implemented in “demonstrative zones of innovative reform” in 11 free trade zones, including those in Beijing, Wuhan, Tianjin, Chongqing, Hebei province, and Henan province. This step to ease visa rules is part of an effort to attract global talent to the country, and follows recent reforms such as the unified work permit and relaxed rules for master’s degree holders.
Beijing cracks down on foreign entities’ IIT evasion
Beijing’s Chaoyang District Local Taxation Bureau has carried out a special inspection campaign on the subsidies and zero-declaration of foreign employees, and has collected RMB 209,000 worth of undeclared IIT, and RMB 28,000 worth of late payment penalties.
In this effort to improve the administration of foreign nationals’ tax affairs, the bureau screened foreign enterprises that declared zero tax, and targeted entities with high operating revenue and profit, and higher concentrations of foreign personnel with low wages as a means to select where to conduct surveys and demand repayment of unpaid tax.
Central and Western region foreign investment catalogue revised
The General Administration of Customs has implemented a revised catalogue of priority industries for foreign investment in the country’s Central-Western Region. It clarifies that foreign-funded projects currently under construction which are not covered by the old catalogue, but covered by the revised one, will be eligible for certain preferential tax cuts.
Preferential import duties can be enjoyed for equipment, technologies, accessories, and spare parts required for the construction of such projects, after the project unit has applied to Customs for duty reduction.
Foreign-funded banks allowed to invest in finance
The General Office of China’s Banking Regulatory Commission (CBRC) has issued a notice on engaging in certain businesses by foreign banks. It clarifies that foreign-funded banks and equity joint banks are not required to obtain administrative permission from CBRC in order to operate in the businesses of government bond underwriting, custody, finance consulting, and other consulting services.
However, foreign banks must report to industry regulators within five days of commencement of such activities, and are also required to make fixed reporting at the end of each quarter regarding business collaboration with the parent bank group during the previous year. On the premise of risk control, foreign-funded banks and equity joint banks may invest in China’s banking financial institutions, as long as they are in accordance with law.
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