China

Chinese Tax Translation of Foreign Exchange Rate in China In accordance with Accounting Law of China provision 12, RMB should be the bookkeeping base currency. If there are other currencies dominate in business operation, one of them can be the base currency for bookkeeping. But it shall exchange into RMB when compiling Accounting Financial Report. However, Chinese Tax Law and Accounting Law have different provisions on Foreign Exchange Conversion, as well as the exchange rate for different tax types. The following are the provisions on Foreign Exchange Conversion of several main types of taxes in China:   Value-added Tax, Consumption Tax, Resource Tax, Land Appreciation Tax   Enterprises shall convert any foreign currency into RMB if have the revenues subject to above tax categories. The exchange rate shall be the PBC’s exchange rate on the day of the sales or on the first day of the month. Enterprises shall determine […]

Summary of Deduction Items and Standard for CIT in China(Continued 2)   No. Deduction Items Standard of Deduction/Proportion of Limit Remark 32 Unverified provision Non-deductable   33 Depreciation of fixed assets Deductable within the prescribed scope Not exceed the minimum period of depreciation 34 Depreciation of productive biological assets Deductable within the prescribed scope 10 years for woods, 3 years for livestock 35 Amortization of intangible assets Amortization period not less than 10 years General intangible assets Amortizion based on the period stipulated by the law or contract Intangible assets obtained from investment or purchase Non-deductable Goodwill created by the enterprise itself Non-deductable Intangible assets irrelated to the business operation 36   Long term deferred expense Deductable within the limit amount 1. The amortization for reconstruction expenses of buildings that have been fully depreciated shall be apportioned according to the estimated useful life 2.  The amortization for reconstruction expenses of […]

How to Lawfully Adjust the Post of an Employee in China?   According to Article 35 of the Labour Contract Law of the PRC, the labour contract cannot be amended unless the employer the employee have reached a consensus on such amendment. The post of the employee is an essential provision of the labour contract. The employer should in principal negotiate with the employee and reach a consensus before adjusting the post of the employee. The employer may encounter some legal risks if it fails to reach a consensus with the employee and adjust the post of the employee unilaterally.   In practice, the employer usually stipulates in the labour contract that the employer is entitled to adjust the job description or position of the employee at any time if needs arise in its production and operation. Is it possible for the employer to adjust the post of the employee […]

 China will Further Relax Market Access in Hainan The National Development and Reform Commission and the Ministry of Commerce of the PRC jointly released 22 special measures to further relax market access in Hainan Free Trade Port on 7 April 2021. The special measures mainly cover the following five sectors:    Medical Sector (1)  Establish an electronic prescription center in Hainan, prescription drugs can be sold over the internet via the center; (2)  Encourage the first set of high-end medical equipment to be produced in Hainan; (3)  Increase support for market access of drugs, qualified innovative drugs can be used directly once approved; (4)  Fully relax access restrictions on Contract Research Organization (CRO); (5)  Support the development of high-end medical beauty industry in Hainan; (6)  Optimize the market access and development environment of transplantation science in all fields; (7)  Establish a mixed ownership reform fund for the development of medical […]

Summary of Deduction Items and Standard for CIT in China(To be Continued)   No. Deduction Items Standard of Deduction/Proportion of Limit Remark 1 Employee’s salary Aactual salary amount Employment, reasonable salary amount Additional 100% deduction Salary of disabled employees 2 Welfare 14% Gross salary of the employees 3 Employee’s education expenses 8% Gross salary of employees, the excess part can be carried forward in the following years Full amount Operator training fees for nuclear power generation enterprise Full amount Employee training fees for software enterprise 4 Labour union funds 2% Gross salary of the employees 5 Entertainment expenses MIN（60%，5‰） 60% of the acutal entertainment expense versus 5‰ of the sales revenue, the lower one is allowed to be deducted；The dividend, equity transfer income of equity investment enterprise can be calculated  as sales revenue   Advertisement expenses & propaganda expenses 15% Sales revenue of current year, the excess part can be […]

Impact of Interrupting Social Insurance Payment in Shenzhen   Basic social insurance benefits will be affeted   (1)     Unable to enjoy medical insurance benefits   Shenzhen resident will be unable to enjoy medical benefits from the next month after stopping payment of social insurance.The accumulated payment period will be regarded as zero if stop the payment over 3 months,  which also will affect the amount of hospitalization reimbursement.   (2)     Unable to enjoy maternity insurance benefits   Maternity insurance refers to medical allowance offered to female employees during their preganent period as well as after childbirth, which shall be enjoyed after a full year payment of  social insurance. Female employees are not allowed to enjoy the maternity insurance benefits if they fail to make one consecutive year of social insurance payment before delivery.   (3)     Individuals are not allowed to enjoty severe disease & employment injury insurance benefits if stop […]

GD Special Workers Can Buy Work-related Injury Insurance from April   On 31 December 2020, the Human Resources and Social Security Department, Department of Finance and Taxation Bureau of Guangdong Province jointly released the Measures for Specific Personnel Like Workers Beyond the Statutory Retirement Age to Participate in Work-related Injury Insurance (for Trial) (hereinafter referred to as the Measures), which will come into force on 1 April 2021.   According to the Measures, the working units in Guangdong Province can voluntarily choose to participate in work-related injury insurance for the following specific personnel:   who work beyond the statutory retirement age, include those who have enjoyed pension insurance benefits and those who have not.   who have already enjoyed level 1 to level 4 work-related injury disability allowance or invalidity allowance.    interns (including work-study students) and trainees.   housekeeping service personnel working in housekeeping service institutions.    relevant personnel […]

Circumstances in Which Individuals No Need to Pay VAT for Providing Services   Individuals provide services abroad, or have cross-border taxable activites whereas can enjoy tax exemption as stipulated in tax law   According to Measures for the Pilot Implementation of Replacing Business Tax with VAT, enterprises and individuals who sell services, intangible assets or real estates in China are VAT taxpayers.   According to Administrative Measures (Trial) on VAT Exemption for Cross-border Taxable Activities by SAT, enterprises and individuals who have cross-border taxable activities in China can be exempted from VAT in light of relevant provisions.   Therefore, individuals do not need to pay VAT for services provided abroad or have cross-border taxable activities that can enjoy tax exemption according to tax law.   Overseas individuals provide services entirely abroad   According to Measures for the Pilot Implementation of Replacing Business Tax with VAT, overseas enterprises or individuals do […]

China to Implement Special VAT E-invoice   On 20 December 2020, the State Taxation Administration of the PRC released a circular to implement special VAT electronic invoice among newly established and registered taxpayers (hereinafter referred to as new taxpayers) throughout the country. The main contents of the circular are as follows:   Starting from 21 December 2020, special VAT electronic invoice will be implemented among new taxpayers in 11 regions, including Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, Chongqing, Sichuan, Ningbo and Shenzhen.   Starting from 21 January 2021, special VAT electronic invoice will be implemented among new taxpayers in 25 regions, including Beijing, Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangxi, Hainan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Dalian, Xiamen and Qingdao.   Electronic signatures will replace the invoice seal of the taxpayer. The legal effect, basic usage and basic use regulations […]

Measures to Facilitate HK and Macao Residents in Shenzhen   Recently, Shenzhen Municipality has announced a series of measures to further facilitate the development of Hong Kong and Macao residents in Shenzhen (hereinafter referred to as the Measures). The Measures consists of 18 policies that aim to facilitate the study, employment, entrepreneurship and life of Hong Kong and Macao residents in Shenzhen.   Hong Kong and Macao residents are given the equal treatment of Shenzhen registered residents by 4 policies, which include: Further support Hong Kong and Macao students to have internship and employment in Shenzhen (Article 7); Further support Hong Kong and Macao youth to participate in innovation and entrepreneurship activities in Shenzhen (Article 11); Provide public transport concessions for Hong Kong and Macao residents coming to Shenzhen (Article 16); Further promote social security cooperation between Shenzhen, Hong Kong and Macao (Article 17).   Besides, Hong Kong and Macao […]