April 2023 / China

April 5 2023

Shanghai has issued two important documents to promote foreign trade and investment

On April 4, the Shanghai Municipal People's Government published on its website "Measures to attract and utilize more foreign investment" and "Measures to promote steady scale and quality of foreign trade". Both documents will come into effect on April 6, 2023.

Among them, "Several Measures for Shanghai to Increase the Attraction and Utilization of Foreign Investment" put forward 20 measures, requiring more financial and tax support for the landing of foreign investment projects. The measures will implement the policy of exempting withholding income tax temporarily from foreign investors' direct investment based on profit distribution, optimize the handling process, and make it more convenient for foreign-invested enterprises to enjoy the policy. All districts may, in light of the actual situation and within the scope of their legal authority, reward enterprises with foreign investment, newly invested projects with foreign investment and reinvested projects with profits of enterprises with foreign investment that meet the industrial development orientation of Shanghai Municipality according to their comprehensive contribution to the economy and society of the region.

April 19 2023

Districts in Shanghai Encouraged to Reward Firstly Recognized High-tech Firms

The General Office of the Shanghai Municipal People's Government released on April 19, 2023 the Several Guidelines on Further Delegating Power to Boost Science and Technology Innovation, which will take effect on April 20, 2023 and remain valid until April 19, 2028.

The document stressed the need to enhance the R&D capabilities of technology-based small and medium-sized enterprise ("technology-based SMEs"), urging to foster a number of technology-based SMEs that have strong R&D capabilities, high technical level and intensive network of scientific and technological talents. It encourages various districts in Shanghai to support technology-based SMEs to improve their R&D capabilities by funding them to conduct technological innovation, and reward those enterprises that are recognized as hi-tech ones for the first time and are within the validity periods. It also supports the development of incubators for technology-based SMEs, stressing establishment of a linkage between investment and incubation to enhance the service capacity of the incubators.

April 13 2023

Shenzhen’s Authority of Qianhai Issues Further Incentive Policies to Support the High-Quality Development of Local Financial Industry

The Authority of Qianhai in Shenzhen released on April 12, 2023 the revised Special Fund Management Measures for Supporting the High-Quality Development of the Financial Industry in the Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone, which will be effective for three years starting on April 10, 2023.

Consisting of a total of 45 articles, the revised Measures support the development of the characteristic financial industry. For the first three years of the lease term, companies engaged in specialized aircraft and aviation equipment leasing business will get uncapped annual rewards at a rate not exceeding 2.5 percent of the total contractual rental amount, while companies operating in ship, marine equipment and other businesses can receive uncapped rewards at 1 percent of their actual lease contract amount or the purchase contract amount of leased assets of the concerned year. The Measures also earmark sufficient supporting funds to encourage the development of commercial factoring, support the listing of enterprises to raise funds, and promote financial institutions to better serve the real economy.

April 20 2023

China to further shorten negative list for foreign investment

China will appropriately shorten the negative list for foreign investment, as part of efforts to promote high-level opening up.

Efforts have been made to evaluate the effect of the list over the past few years and learn about the demands of foreign-invested enterprises, Meng Wei, spokesperson of the National Development and Reform Commission, said at a press conference.

China retains its appeal for foreign investors as the country's long-term economic growth provides opportunities, said Meng, citing the increasing foreign direct investment inflow and frequent business trips of executives from global firms to China in recent months.

Meng pledged more moves to proactively utilize foreign investment, saying that policies to channel more foreign investment to advanced manufacturing, high-end technologies and modern services, as well as the central, western and northeastern regions of the country, will be fully implemented.

Special working mechanisms for major foreign investment projects will be further exploited, while development zones will be better leveraged to attract overseas investors, she said, adding that better services will be provided.

Source: gov.cn 

April 10 2023

Preferential CIT policies were introduced for small and micro-profit enterprises whose annual taxable income does not exceed 1 million yuan

On March 26, the Ministry of Finance and the State Administration of Taxation jointly issued a Notice on Preferential CIT policies for small and micro-profit enterprises (SMEs) and individual industrial and commercial households. The notice will be implemented from January 1, 2023 to December 31, 2024.

The Announcement makes clear that the part of the annual taxable income of small, micro-profit enterprises that does not exceed 1 million yuan shall be included in the taxable income at a reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20%. On the basis of the current preferential policies, individual income tax shall be levied by half on the part of the annual taxable income of individual industrial and commercial households that does not exceed 1 million yuan. We conclude the eventual preferential CIT rates for small, micro-profit enterprises are:

Taxable profit Final CIT rates Period of Validity
Total ≤ 3M 5% Valid till 31/12/2024
Total >3M 25%

SMEs shall mean enterprises engaging in non-restricted and non-prohibited businesses, which satisfy the three criteria simultaneously:

Total assets ≤ CNY 50,000,000
Taxable Profit ≤ CNY 3,000,000
Number of employees ≤300
April 2 2023

Two Authorities Optimize Policy of Extra Tax Deduction for Research & Development Expense

The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") jointly published on March 26, 2023 the Announcement on Further Improving the Policy of Extra Tax Deduction for Research & Development Expenses, effective January 1, 2023.

"Announcement" makes it clear that for the actual R&D expenses which enterprises actually incurred in the R&D activities, enterprises can enjoy additional 100% deduction for taxable income if the R&D expenses do not form intangible assets but go into the current profit and loss; enterprises can amortize the intangible assets at 200% of its cost if the R&D expenses are formed into intangible assets. The announcement is valid from January 1, 2023.

April 2 2023

State Administration of Taxation of the Ministry of Finance: Extend the preferential policy of urban land use tax for some land used by logistics enterprises

On March 26, the Ministry of Finance and the State Administration of Taxation issued the Announcement on Continuing to implement Preferential Policies on urban Land Use tax for bulk commodity storage Facilities used by logistics Enterprises.

"Notice" makes it clear that from January 1, 2023 to December 31, 2027, the facility lands for bulking commodity which logistics enterprises own (including self-use and rent) or leased, can be reduced by 50% of the applicable tax standard of the land class to calculate urban land use tax. The Notice also regulates logistics enterprises, bulk commodity storage facilities and land use for storage facilities. Taxpayers enjoying the tax reduction policy stipulated in the "Notice" should declare tax reduction and exemption according to the provisions, and keep the real estate ownership certificate, land use certificate, lease agreement and other materials for future reference.

April 4 2023

The Ministry of Finance: The temporary tariff rate of zero for coal imports will continue until the end of this year

The Tariff Commission of The State Council recently issued the Notice on Extending the implementation period of the Provisional Zero Tariff Rate on Coal Imports, which decided to continue to apply the provisional zero tariff rate on coal imports from April 1, 2023 to December 31, 2023.

At the same time, the Announcement released the Provisional Tax Rate Table of Coal Import, which includes seven types of commodities: unmade anthracite, coking coal, unmade other bituminous coal, unmade other coal, coal brick, coal briquettes and similar solid fuels made from coal, unmade brown coal and made brown coal.