April 2024 / China

From April 1, 2024, to March 31, 2025, enterprises registered in the China (Shanghai) Pilot Free Trade Zone and the Lingang New Zone shall be exempted from paying stamp tax on contracts of sale and purchase for offshore trade business, according to a notice released by the Ministry of Finance (MOF)and the State Administration of Taxation (SAT) , named by the Notice on the Preferential Stamp Duty Policy for Offshore Trade in the China (Shanghai) Pilot Free Trade Zone and the New Port Area.(Cai Shui [2024]No.8)

Offshore trade, or documentation processing trade, refers to a trade model in which the goods are transferred directly from the exporting country to the importing country without entering the border of a middle country.

Without such preferential tax policy, according to the Stamp Duty Law of the People's Republic of China, when an enterprise engages in offshore resale trading, the stamp duty shall be levied on the contracts of both purchases and sales according to 0.03% of the contract amount. This will have no small impact on the profits of offshore trading companies.

This is the first preferential tax policy issued and implemented by China for offshore business, and the first trial in Shanghai means that China has taken a substantial first step in the exploration and practice of offshore tax system. The introduction of this preferential policy will enhance the confidence of offshore trade enterprises newly settled in Shanghai.

You may click the following link for the full contents of Notice No.8: https://www.gov.cn/zhengce/zhengceku/202402/content_6931760.htm

China is offering "strong" financial support to promote the large-scale renewal of equipment and the trade-in of consumer goods, and fiscal support from the central government will focus on key areas like new energy vehicles.

On April 24, 2024, several ministries launched detailed implementation plans for financial subsidy to the trading-in of old cars, up to December 31, 2024, a one-time quota subsidy will be given to individual consumers who scrap high-emissions passenger cars or purchase new energy cars that meet energy-saving requirements as follows:

• to scrap national III and below emission standard fuel passenger vehicles
• to scarp new energy passenger vehicles registered before April 30, 2018,
• to purchase new energy passenger cars that are included in the "New Energy Vehicle Model Catalogue of Vehicle Purchase Tax Reduction and Exemption", or
• to purchase fuel passenger cars with displacement of 2.0 litres and below

For scrapping the above two categories of old cars and buying new energy passenger cars, a subsidy of 10,000 yuan; for those who scrap national III and below emission standard fuel passenger cars and buy 2.0 litres and below emission fuel passenger cars, a subsidy of 7,000 yuan.

The detailed plans were issued in order to implement the spirit of the Action Plan for Promoting Large-scale Equipment Renewal and Replacing Old Consumer Goods with New Ones announced by the State Council in March (Guo Fa (2024) No.7), with the target that as of 2027, the recycling volume of scrap vehicles is expected to roughly double from 2023, and used car transactions will increase by 45 percent.

According to the Action Plan, detail preferential tax support will be offered for equipment renewal and technological transformation in the industrial sector, such as special equipment for energy conservation, water conservation, environmental protection, and production safety, and particularly digital and intelligent transformation.

Diacron will keep an eye on any further developments and update you accordingly.

You may click below link for the Action Plan and detail plans:

https://www.gov.cn/zhengce/zhengceku/202403/content_6939233.htm

https://fgk.chinatax.gov.cn/zcfgk/c102424/c5223351/content.html

On 8 April 2024, the Tax Policy and Legislation Department of State Administration of Taxation (SAT) announced the “2024 Tax Department Regulations Formulation Plan”, which includes a total of four regulations as follows:

• Formulation of the “Administrative Measures for Tax-related Professional Services (Trial)”
• Revision of the “Rules for Tax Administrative Reconsideration”
• Revision of “Measures for Tax Arrears Announcement (Trial)”
• Formulation of the “Administrative Measures for the annual Individual Income Tax Reconciliation for Consolidated Income”

Please kindly note the Plan is SAT level regulation, which exclude high-level laws formulation (such as state council and NPC Standing Committee). We will keep update for any further development.

You may click below link for the full contents of 2024 Tax Department Regulations Formulation Plan: https://www.chinatax.gov.cn/chinatax/n810214/c102374/c102375d/c5222488/content.html

On 3 April 2024, the State Administration of Foreign Exchange (SAFE) released a notice regarding further optimizing foreign exchange business processes to facilitate trade (Hui Fa [2024] No. 11), effective from June 1, 2024.

The key facilitating measures in the Circular 11 include:

1. Easy registration procedures for enterprises. Currently, local branches of the SAFE conduct the registration and approval for trade enterprise catalog administration, after the new Circular, domestic banks will directly handle the registration of enterprises to be listed in the trade enterprise catalog.

2. Simple receipt/payment procedures for enterprises in Customs special trade. Domestic banks can simplify the procedures for handling foreign exchange receipts and payments for enterprises that are inconsistent with the import and export enterprises within the Customs special supervision areas according to the principle of business expansion.

3. Generous procedures for special foreign exchange returns for Class A enterprises. Without the need of registration with SAFE, domestic banks may handle special foreign exchange returns for Class A enterprises’ goods trade, including non-original route returns and returns exceeding 180 days, with a single transaction cap of USD200,000.

4. Optimized procedures for special foreign exchange returns for Class B/C enterprises. Class B and Class C enterprises that meet certain conditions can handle deferred receipts and payments exceeding 90 days after registration with local branches of the SAFE.

https://www.gov.cn/zhengce/zhengceku/202404/content_6943880.htm