China Regulatory Brief: Relaxed Requirements for Obtaining Permanent Residency in China
China Releases Regulations on Approval and Filing of Investment Project
On June 12, China’s National Development and Reform Commission (NDRC) released the “Administrative Regulations on Approval and Filing of Investment Project,” which is currently open to public commentary. According to the Regulations, enterprises seeking to invest in projects that are subject to the government approval are required to submit an application report, which includes detailed information of the company, the introduction of the project, as well as an analysis of resources use and the influence over the society. China will implement an online supervision platform, gradually allowing enterprises to complete the approval and filing procedures online. In principle, the government shall decide whether to grant the approval within 20 working days following the date of application submission.
China Prohibits Tax Officials from the Interference in the Operation of Tax Agencies
On May 21, China’s State Administration of Taxation (SAT) released the Circular 75 aiming to limit the interference of tax officials in the operation of tax agencies (including accounting firms, registered tax agents, tax consultancies and law firms etc.,). The Circular explicitly prohibits tax officials from being engaged in five business activities such as forcing taxpayers to accept tax services from certain tax agencies. Further, the Circular put new restrictions on tax officials’ spouses and children holding jobs in tax agencies. Previously, some tax officials were known to partner with local accounting firms to reap financial gains. For example, a tax official may become a shareholder in a local CPA firm or put himself or his family members on its payroll, and uses his administrative power in the government to channel business into the firm. Tax officials are now required to file annual disclosure forms to indicate compliance.
Requirements Loosened for Foreigners Obtaining Permanent Residency in China
On June 8, China’s Ministry of Public Security announced its decision to loosen the requirements for foreigners to obtain the permanent residence permit in China. Specifically, foreigners working in seven types of enterprises and public institutions, including national laboratory, foreign-invested R&D centers will be eligible to apply for permanent residence in China. Previously, only foreigners who make “outstanding contributions” to China will be granted permanent residence. China has been stepping up its effort to attract talented foreign individuals to work and reside in the country. The recent announcement has paved the way to further relax the requirements on permanent residency.
China Clarifies Pre-tax Deduction Policies for Employee’s Education Expenditure
On June 9, the Ministry of Finance and SAT jointly released a notice which clarifies the pre-tax deduction policies for employee’s education expenditure of high and new technology enterprises. “High and new technology enterprises” refers to enterprises engaged in the provision of science and technology services and have already obtained high and new-technology enterprise certification from the government. Under the new policy, certain enterprises will be able to deduct their employees’ education expenditures before tax, provided that the expenditure accounts for less than eight percent of the employee’s wages. The portion of expenditure that exceeds eight percent of the employee’s wages may be deducted in the subsequent taxation years. The Notice is effective retroactively from January 1, 2015.
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