China

Employment and Entrepreneurship Subsidies in Hengqin   The Management Authority of Heqing New Area of Zhuhai, China issued the Subsidy Measures for Employment and Entrepreneurship of Hong Kong and Macao Residents in Hengqin New Area (hereinafter referred to as the Subsidy Measures) on 22 November 2020, which shall be implemented from the date of issuance to 31 December 2022.  The main contents of the Subsidy Measures are as follows:   Social Insurance Subsidies for Employers to Recruit Hong Kong and Macao Residents   For enterprises (except government institutions and labour dispatch units)  registered in Hengqin New Area and Hongwan Area with real offices in the region, recruit Hong Kong and Macao residents, sign labour contracts with a term of more than one year, and pay social insurance premiums in accordance with laws and regulations, full subsidy will be given according to the contributions of basic pension, medical (maternity), unemployment and […]

Introduction to Macau Corporate Income Tax   Carrying out commercial or industrial activities in Macau comes with certain tax obligations. The major obligations affecting all businesses in Macau are the industrial tax and profits tax. However, in recent years, industrial taxes have been exempted by the Macau Government and the profits tax threshold has also been increased in 2018. As such, Macau is one the region with the lowest corporate tax liability in Asia.   Complementary tax is imposed on the worldwide income earned by Macau-registered entities, irrespective of where their residence or headquarters are situated and irrespective of the nature of the income (except rental income). In the case where a foreign entity is engaged in commercial/industrial activities and/or rendering services in Macau, the resultant gain from such commercial/industrial activities and/or services rendered will be subject to complementary tax.   Other than income from ordinary course of business, capital […]

Social Security Collected by Tax Bureau in Shanghai   In 2018, “Plan for the reform of the state and local tax collection and administration systems” issued by General Office of the China Central Committee and General Office of the State Council has clearly proposed the scheme that the social security will be collected by tax bureau. Now, the contribution of social security for the company and the flexible employment will start to be collected by tax bureau from November 1st, 2020. For more information, please refer to “The notice of social security collected by Tax Bureau” issued on October 30th, 2020.   The scope of contribution for social security could refer to the following chart:   Category Social security Company Pension insurance, medical insurance (include maternity insurance), occupational injury insurance and unemployment insurance Flexible Employment (Including self-employed businesses without employees, part-time employees who are not participating in basic pension insurance […]

Restrictions on Labour Dispatch in China   The term labour dispatch refers to the practice of hiring employees through a labour dispatch service agency, as opposed to direct employment. There is a triangular relationship among the labour dispatch agency, the actual employer and the dispatched employees, where the actual employer enters into a labour dispatch service contract with a labour dispatch service agency and the agency enters into a labour contract with the employee and then dispatches the employee to work for the actual employer.   As a tool for flexible headcount, labour dispatch used to be a mainstream employment arrangement in China. However, in practice, the abuse of labour dispatch arrangements has damaged the legitimate rights of the dispatched employees. In order to regulate the use of labour dispatch arrangements and offer better protection to dispatched employees, China has issued a serial of new regulations on labour dispatch. The […]

New Business Registration Rules to be Implemented in Shenzhen China   On 5 November 2020, the Standing Committee of Shenzhen Municipal People’s Congress officially issued the revised Business Registration Rules in Shenzhen Special Economic Zone (hereinafter referred to as the Rules). The revised Rules will come into force on 1 March 2021. The major changes in this revision are as follows:   Strike Off System   According to Article 27 of the new Rules, if a commercial entity is listed in the abnormal operation list or marked as abnormal operation status for two years due to failure to get in touch through its registered address or business place, and no tax declaration in recent two years, the business registration authority may make a decision to strike off its name from the register.   When the name of a commercial entity has been stroked off, it is also required to complete […]

China to Promote Notification Commitment System Countrywide   On 9 November 2020, the General Office of the State Council of the PRC officially issued a guideline on full implementation of the notification and commitment system for certification issues and enterprise related license issues, which announced the full implementation of the notification commitment system in processing administrative affairs  nationwide.   What is the notification commitment system for certification issues?   Under the notification commitment system of certification issues, the administrative authorities of the government shall inform the applicant in written form (including electronic text) of the proof obligation, proof content and legal liability of false commitment when citizens, legal persons and other organizations apply to process administrative affairs. The applicant promises in writing that it has met the relevant requirements of the notification and is willing to bear the legal liability of false commitment. The administrative authorities shall no longer ask for […]

U.S. New York State  Individual Withholding Tax Requirements   If you are an employer as described in federal Publication 15, Circular E, Employer’s Tax Guide, and you maintain an office or transact business within New York State, whether or not a paying agency is maintained within the state, you must withhold personal income tax.   Out-of-state employers who are not incorporated or licensed under New York State law and do not maintain an office or transact business in New York State are not required to withhold New York State, New York City, or Yonkers income taxes on employees who reside in New York State.   If an out-of-state employer agrees to withhold New York State, New York City, or Yonkers income taxes for the convenience of the employee, then the employer is subject to New York State withholding requirements.   Employers should withhold tax for the following employees:   (1)     […]

The Legal Representative of a China Company   What is a legal representative in China?   According to the Civil Code of the PRC, the legal representative of a legal person refers to the person in charge who conducts civil activities on behalf of the legal person in accordance with the provisions of laws or the bylaws of the legal person.   The legal consequences of civil activities conducted by the legal representative in the name of the legal person shall be assumed by the legal person. Any restriction on the legal representative’s right of representation imposed by the bylaws or the supreme organ of the legal person shall not be set up against bona fide apposite parties.   Where the legal representative of a legal person causes damages to any other person in the performance of duties, the legal person shall assume civil liability for such damage. The legal […]

Taxes Payable by Individuals for the Purchase of Housing in China Taxes payable for transfer of the purchased houses by individuals   (1)  Value added tax   (a)   Individuals who sells houses bought for less than 2 years shall pay VAT in full at the rate of 5%.   (b)   Individuals who sells houses bought for more than 2 years (including 2 years) :   (ⅰ)    Areas outside Beijing, Shanghai, Guangzhou and Shenzhen are exempt from VAT; (ⅱ)   In Beijing, Shanghai, Guangzhou and Shenzhen, individuals shall pay VAT at the rate of 5%  based on the difference between the sales income and the purchase price of the house. VAT shall be exempt when individuals sale ordinary houses which purchased for more than 2 years (including 2 years).   Tax deduction or exemption:   (a)   Individuals selle self-built houses of own use shall be exempt from VAT;   (b)  VAT shall […]

Special Rules for One-person Limited Company in China   One-person limited liability company as stipulated in the Company Law of the PRC refers to a limited liability company with only one natural person shareholder or legal person shareholder. Since there is only one shareholder in a one-person limited liability company, it is easy for the shareholder to abuse the independent status of corporate legal person and shareholder’s limited liability to evade debts. The Company Law of the PRC sets forth special rules in a separate section to regulate one-person limited liability company accordingly. The details are as follows:   Investment Restriction for Natural Person   One natural person is only allowed to establish a one-person limited liability company, which shall not establish any more one-person limited liability company.   No Shareholders Meeting   Since there is only one shareholder in a one-person limited liability company, it has no shareholders meeting. […]