China Regulatory Brief: Small Business Exempt from Surcharges, Additional Commodities Prohibited from Processing

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Small and Micro-sized Enterprises to be Exempt from Governmental Funds

On December 23, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly released the “Announcement on the Abolishment of Governmental Funds for Small and Micro Enterprises (Cai Shui [2014] No.122).” The circular exempts small and micro-sized enterprises whose monthly sales are less than RMB 30,000 or entities making quarterly payments whose sales are less than RMB 90,000, from governmental funds charges. These refer to China’s educational surcharge, local educational surcharge, water conservancy construction charge and cultural construction fee. Furthermore, eligible small and micro-size enterprises hiring fewer than 20 employees shall be exempt from social security payments for the employment of disabled people. The Announcement will take effect on January 1, 2015 and last until December 21, 2017. Since 2012, China has released a series of preferential policies to support the development of small and micro enterprises. 

Related Link IconRELATED: China Launches Support Program for Micro and Small-Sized Enterprises

China Clarifies New Corporate Income Tax Accelerated Depreciation Policy for Fixed Assets

The Ministry of Finance (MOF) and the State Administration of Taxation have jointly issued a Circular 75 (Cai Shui [2014] No. 75) to expand the scope of fixed asset deductions. According to the Circular, the Accelerated Depreciation Method under the Corporate Income Tax (CIT) Law can be applied for CIT deduction purposes. Meanwhile, all fixed assets (including existing fixed assets purchased before January 1, 2014) with an historical cost not exceeding RMB 5,000 can be subtracted in one lump sum as CIT deductions. For fixed assets acquired before January 1, 2015, WFOEs have the option to decide whether to adopt this new policy or not. WFOEs seeking to adopt the new policy shall file an additional document (i.e. Statistical Table) together with the form Prepayment for Accelerated Depreciation (Deduction) of Fixed Assets when making quarterly CIT filings.

MOFCOM Releases 2014 Catalogue of Commodities Prohibited for Processing

On December 19, the Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) jointly published the “2014 Catalogue of Commodities Prohibited for Processing Trade,” which will come into effect on January 1, 2015. The Catalogue also applies to special customs supervision areas (i.e., all types of special economic zones and bonded zones). Enterprises may not process any of the products listed in the Catalogue. China classifies its processing goods into three categories: permitted, restricted, and prohibited goods. A complete Chinese version of the Catalogue can be found here.

China Releases Administrative Measures for Railway Transport Enterprises

China’s Ministry of Transport recently released the “Access Permit Measures for Railway Transport Enterprises,” which will take effect on January 1, 2015. The Measures stipulate that enterprises that hold the ownership rights to railway infrastructure are able to determine their relevant mode of railway transport operations, including independent operation, cooperation and delegation. An enterprise that owns railway facilities and equipment such as locomotives and trains must obtain usage rights for railway infrastructure and apply for approval as a railway transport business. The Measures will take effect on January 1, 2015. 


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