Viewpoints from Kaizen

According to the Notice on the Adjustment of Contribution Base and Rates for Housing Provident Fund issued by Shenzhen Housing Provident Fund Administration Centre on June 30, 2014, the following adjustments shall be implemented. 1. Starting from July 1, 2014, the employer shall adjust the contribution base for Housing Provident Fund. The new contribution base is the average salary of the employee in 2013. 2. During the period from July 1, 2014 to June 30, 2015, the contribution base shall be between RMB1,600 and RMB26,091. 3. Starting from July 1, 2014, the employer may adjust the contribution rate for Housing Provident Fund according to its own situation. 4. The above adjustments shall take effect from July 1, 2014 till June 30, 2015. If the employer fails to make adjustment from July 1, 2014, it shall make up the balance accordingly.

To all Provinces, Autonomous Regions, Municipalities, Fiscal Bureau of Separately Listed Cities, National Tax Bureaus, Local Tax Bureaus and the Finance Bureau of Xinjiang Production and Construction Corps, Having be approved and ratified by the State Council, in order to further support the development of small low-profiting making enterprises, the income tax policy for small low-profit making enterprises is announced as follow: 1. From January 1, 2015 to December 31, 2017, for small low-profit making enterprises whose annual taxable income is less than RMB200,000 (including the RMB200,000), the annual taxable income shall be half of their annual income and be levied at the tax rate of 20%. The aforesaid small low profit making enterprises refer to the enterprises conform to the Enterprise Income Tax Law of People’s Republic of China (hereafter referred to Enterprises Income Tax Law) and its implementation regulations. 2. The number of employees stated in the first […]

Notice of the State Administration of Taxation on Printing and Distributing the Measures for Verification Collection of Enterprise Income Tax (for Trial Implementation) No. 30 [2008] of the State Administration of Taxation Offices of the State Administration of Taxation and local taxation bureaus in all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning, The Measures for Verification Collection of Enterprise Income Tax (for Trial Implementation), which were formulated by the State Administration of Taxation for the purpose of strengthening the verification collection of enterprise income tax, are hereby printed and distributed to you, please comply with them accordingly. 1. The determination of the manner of the collection of enterprise income tax shall be in strict accordance with the prescribed scope and criterions. The scope of verification collection of enterprise income tax should not be expanded illegally. It is strictly forbidden to uniformly adopt […]

Materials Required for Registration of Permanent Representative Office in Beijing Foreign enterprises apply to establish permanent representative office are required to provide the following documents: 1. Application Form (original) Application form for establishing the representative office in Beijing shall be signed by the authorized signer of the enterprise. In the form, the basic information of the representative office, brief introduction of the foreign enterprise, resume of chief representative and representative (if any), etc. will be included. 2. Copies of Incorporation Documents of the Foreign Enterprise, such as Certificate of Incorporation These documents shall be notarized by a local notary public and legalized by the Chinese embassy or consulate where the foreign enterprise is registered. 3. Banker’s Reference Letter (original) issued by the financial institution which has business relations with the enterprise. This document shall be notarized by a local notary public and legalized by the Chinese embassy or consulate where […]

I. Direct Foreign Investment Foreign invested enterprises are those established in China by foreign investors in compliance with State laws, in way of international direct investment. With the ‘nationality’ of Chinese, foreign invested enterprises consist of three major forms, namely wholly foreign-owned enterprises, Sino-foreign cooperative joint venture and Sino-foreign equity joint venture. 1. A wholly foreign-owned enterprise, WFOE (also known as Wholly Owned Foreign Enterprise, WOFE) is an enterprise established within China with exclusive capital investment by a foreign firm, economic entity or individual in accordance with Chinese laws, such as a daughter company or a new company established within China by a foreign firm. 2. A Sino-foreign Equity Joint Venture (EJV) is an enterprise formed within China jointly by a foreign firm or other economic organization or individual and a Chinese company, enterprise or other economic organization in accordance with Chinese laws. It has the following characteristics: a. The […]

1. Introduction VAT is chargeable on the sale of goods, provision of processing and repair service, and the importation of goods within the People’s Republic of China. Generally, output tax charged on the sales of goods may be set off against input tax incurred on the purchase of the goods or materials. However, some input tax is not creditable, such as the goods purchased for non-taxable and tax-exempt items, or abnormal losses. Beginning from April 1, 2002, capital equipment imported for foreign investment projects in the “Encouraged” Category and imported for self-use within the total investment limit, can be imported free of VAT and customs duty, if the capital asset is not included in the “Catalogue for Foreign Investment Project Import Items that are not Tax-exempt”. 2. Mixed Sales A mixed sales activity involves both goods and non-taxable services. Mixed sales activities of enterprises engaged in production, wholesaling or retailing […]

In a Sino-Foreign Cooperative Venture (also known as Contractual Joint Venture, CJVs), the parties involved may operate as separate legal entities and bear liabilities independently rather than as a single entity. A Cooperative Joint venture may also be registered as a limited liability entity resembling an Equity Joint Venture in operation, structure, and status as a Chinese legal entity. There is no minimum foreign contribution required to initiate a cooperative venture, allowing a foreign company to take part in an enterprise where they preferred to remain a minor shareholder. The contributions made by the investors are not required to be expressed in a monetary value and can include excluded in the equity joint venture process can be contributed such as labor, resources, and services. Profits in a cooperative venture are divided according to the terms of the cooperative venture contract rather than by investment share, allowing a more flexible schedule […]

Equity joint ventures are the second most common manner in which foreign companies enter the China market and the preferred manner for cooperation where the Chinese government and Chinese businesses are concerned. Joint ventures are usually established to exploit the market knowledge, preferential market treatment, and manufacturing capability of the Chinese side along with the technology, manufacturing know-how, and marketing experience of the foreign partner. Normally operation of a joint venture is limited to a fixed period of time from thirty to fifty years. In some cases an unlimited period of operation can be approved, especially when the transfer of advanced technology is involved. Profit and risk sharing in a joint venture are proportionate to the equity of each partner in the joint venture, except in cases of a breach of the joint venture contract. Shareholdings in a joint venture are usually non-negotiable and cannot be transferred without approval from […]

China’s re-entry into the World Trade Organisation (“WTO”) in December 2001 represented a fundamental shift in China’s commercial and legal environment. A new wave of foreign investment is now permitted as China begins to open certain industry segments, particularly in the services sector, that previously were closed to foreign participation. Whereas previously only major multi-national corporations were equipped to manage the complexities of investment in China, more and more small- and medium-sized foreign enterprises are entering China as it becomes the workshop for the world, increasingly in high technology areas as well as in more traditional manufactured goods. Operations of multinational corporations in China are becoming increasingly more localized, and Chinese enterprises are becoming increasingly sophisticated and internationalized. Certain remnants of the old centrally-planned economy have not yet been fully discarded, but the direction of change in China continues to be positive and the pace of change continues to be […]

Item Name of Law/Regulations Code 1 Individual Income Tax Law of the People’s Republic of China   2 Regulations for Implementation of the Individual Income Tax Law of the People’s Republic of China Decree [1994] No.142 of the State Council 3 Measures for the Implementation of Collection of Individual Income Tax Decree [1999] No.272 of the State Council 4 Law of the People’s Republic of China Concerning the Administration of Tax Collection   5 Circular of the State Administration of Taxation on the Questions Concerning the Taxation of Profits from the Transfer of Stocks (Stock Rights) and Dividend Income of Enterprises with Foreign Investment, Foreign Enterprises and Individual Foreigners GuoShuiFa [1993] No.45 6 Circular of the Ministry of Finance and the State Administration of Taxation on Some Policy Issues regarding Personal Income Tax CaiShuiZi [1994] No. 020 7 Circular of the State Administration of Taxation on Questions Concerning the Tax […]