China Regulatory Brief: Paperless Clearance System Implemented & SME Tax Registration Streamlined
China Cancels Three Administrative Approvals for Small and Micro-sized Enterprises
China’s State Council recently released the “Circular on Cancellations and Adjustments for Several Administration Approvals (Guo Fa  No.27)”, which took effect on July 22, 2014. The Circular abolishes the need to apply for administrative approvals pertaining to three preferential tax policies designated for small and micro-sized enterprises, including:
- The approval for encouraged foreign-invested projects,
- The examination and approval for small and low-profit enterprises to enjoy the preferential corporate income tax (CIT); and
- The approval for eligible enterprises engaged in service and foreign trade industries and which hire laid-off workers to enjoy tax reduction or exemption.
These preferential policies will automatically apply to qualified enterprises.
Shanghai FTZ Carries Out “Paperless Clearance” System
On August 5, China’s Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) jointly released the “Announcement on Launching Pilot Paperless Customs Clearance for Goods imported into the Shanghai Free Trade Zone (Announcement  No.58).”
According to the Announcement, from August 11, 2014, eligible goods (excluding oil and fuel oil) which are subject to the Automatic Licensing system under the “one-batch-one-license” mode (meaning that the same import license can only be used for clearance once) will be exempted from submitting the hardcopy version of the Automatic Import License. The information and licenses of such goods will instead be checked by the Customs through the online verification system.
The Automatic Licensing system was implemented by the MOFCOM to monitor the importation of goods falling under the “permitted” category. MOFCOM and the General Administration of Customs (GAC) jointly issue a catalog of goods subject to automatic licensing annually. An automatic license needs to be applied for, and the goods import contract is one of the required application documents.
Tax Refund Policy at Ports of Departure to Expand from September 1
The Ministry of Finance (MOF), the GAC and the State Administration of Taxation (SAT) jointly released the “Announcement on Expanding the Scope of Tax Refund Policies at Ports of Departure (Cai Shui  No.53)”, which will take effect on September 1, 2014. The Announcement clarifies that the tax refund policy will be expanded to apply to container cargos that meet the following conditions:
- Exported from the ports of departure stipulated in the Announcement such as Nanjing Longtan port, Suzhou Taicang port and Qingdao Qianwan port;
- Transported by eligible transportation companies using a direct waterway via Shanghai Yangshan Bonded Port.
Shanghai Requires Foreign Fast-Food Chains to Disclose Suppliers
On August 9, the Shanghai’s Municipal Food and Drug Administration (SHFDA) announced that foreign fast-food chains including McDonald’s and Yum are now required to disclose information about their food suppliers, raw materials and relevant quality certifications on their official websites in accordance with China’s Food Safety Law.
The usually confidential information, which is generally kept from the public to avoid competition, is now required to be published in a bid to strengthen China’s supervision of food safety. A meat and poultry supplier to McDonald’s and Yum Brands (KFC, Taco Bell, Pizza Hut) outlets in China was recently revealed to be using expired meat in the production of burgers and chicken products.
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Strategies for Repatriating Profits from China
In this issue of China Briefing, we guide you through the different channels for repatriating profits, including via intercompany expenses (i.e., charging service fees and royalties to the Chinese subsidiary) and loans. We also cover the requirements and procedures for repatriating dividends, as well as how to take advantage of lowered tax rates under double tax avoidance treaties.
Guide to the Shanghai Free Trade Zone
In this issue of China Briefing, we introduce the simplified company establishment procedure unique to the zone and the loosening of capital requirements to be applied nation wide this March. Further, we cover the requirements for setting up a business in the medical, e-commerce, value-added telecommunications, shipping, and banking & finance industries in the zone. We hope this will help you better gauge opportunities in the zone for your particular business.
Revisiting China’s Value-Added Tax Reform
In this issue of China Briefing Magazine, we review recent steps taken by the Chinese government to reform its value-added tax policy. Specifically, we examine the sectors covered by the new Pilot Reform program with a focus on tax rates, taxpayer status and the calculation of VAT. We also include a VAT Pilot Reform Rates Chart, which overviews each affected industry’s tax rate and VAT exempted services.
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