Recent Important Regulation Highlight

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Preferential Corporate Income Tax Regulation for Hainan Free Trade Port Clarified

Recently, the Chinese Ministry of Finance (MOF) and the State Administration of Taxation (SAT) have jointly issued a circular to clarify the preferential regulation on Corporate Income Tax (CIT) for enterprises established in the Hainan Free Trade Port (FTP), which is retrospectively effective from 1 January 2020 to 31 December 2024. The details are as follows:
  • Enterprises in the encouraged industries with substantial operations are subject to CIT at a reduced rate of 15 percent;
  • For enterprises in the tourism, modern service and high-tech industries, the income obtained from newly increased overseas direct investment is exempt from CIT;
  • Newly purchased fixed assets or intangible assets with unit price lower than RMB 5 million could be one-off deducted from the taxable income as costs and expenses; for that with unit price exceeding RMB 5 million, the fixed assets or intangible assets could be depreciated over a shortened period or according to the accelerated depreciation method.

Extension of Social Security Fund Reliefs due to Covid-19 Pandemic

In early March 2020, the Chinese government granted several reductions and exemptions from social security contributions in order to reduce the economic impact of the coronavirus pandemic. Now the Ministry of Human Resources and Social Security (MOHRSS), the Ministry of Finance and the State Administration of Taxation issued a joint statement to further reduce the social security burden of organizations, especially extended the relief for small and medium sized enterprises (SMEs) to the end of December 2020.

Preferential Corporate Income Tax Regulation in Shanghai Free Trade Zone Lingang New Area

Recently, the Shanghai Finance Bureau and the Shanghai Taxation Bureau jointly released preferential policies on corporate income tax for key industries in the Lingang New Area of the Shanghai Free Trade Zone. The notice clarifies that from 1 January 2020 enterprises engaged in key fields such as integrated circuits, artificial intelligence, biomedicine, civil aviation, etc., and conducting substantial production or R&D activities in the Lingang New Area will be subject to a reduced CIT rate of 15 percent for five years from the date of establishment.

China Allows Re-entry for Foreigners with Valid Residence Permits

Recently, the Chinese Ministry of Foreign Affairs and the National Immigration Administration jointly issued a notice that, starting from 28 September 2020, foreigners with valid residence permits for work, private affairs and reunion will be allowed to re-enter the country.

Urban Construction Tax Law and Deed Tax Law are Officially Released

Recently, the Urban Construction Tax Law and the Deed Tax Law have been officially issued, which will be implemented from 1 September 2021. This indicates that the previous temporary regulations of urban construction tax and deed tax are officially legitimated as laws.

Updates to Housing Fund In Beijing

In September the Beijing Housing Fund Management Center announced a new notice which comes into effect on 9 October 2020. With the new notice acts in violation of the provisions of "Regulations on Management of Housing Provident Fund" will be punished. There are three grades of penalty: A, B and C. The corresponding fines are RMB 10,000 (A), RMB 10,000 - 30,000 (B) and RMB 30,000 - 50,000 (C). 
Unlawful acts mainly include the following:

A. Where failing to do so at the expiration of the time limit, a fine of RMB 10,000 shall be imposed:
  • Failing to undertake registration of payment and deposit of housing provident fund less than a year;
  • Failing to set up accounts of housing provident fund for staff and workers less than 5 people.

B. Where failing to do so at the expiration of the time limit, a fine of RMB 10,000 - 30,000 shall be imposed:
  • Failing to undertake registration of payment and deposit of housing provident fund less than 2 years;
  • Failing to set up accounts of housing provident fund for staff and workers less than 10 people.

C. Where failing to do so at the expiration of the time limit, a fine of RMB 30,000 - 50,000 shall be imposed:
  • Failing to undertake registration of payment and deposit of housing provident fund more than 2 years;
  • Failing to set up accounts of housing provident fund for staff and workers more than 10 people.
  • Again within 2 years, in violation of the provisions of "Regulations on Management of Housing Provident Fund".

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