July 2019 / China

The Ministry of Finance and the State Administration of Taxation recently issued the Announcement about Continuing Implementation of Preferential Policies on Vehicle Acquisition Tax, effective from July 1, 2019. From January 1, 2018 to December 31, 2020, buyers of new energy vehicles will be exempted from vehicle acquisition tax; from July 1, 2018 to June 30, 2021, buyers of trailers will pay half of vehicle acquisition tax.

The National Development and Reform Commission and the Ministry of Commerce released three documents on June 30, 2019, effective from July 30, 2019. The three documents are the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2019), the Special Administrative Measures (Negative List) for the Access of Foreign Investment in Pilot Free Trade Zones (2019), and the Catalogue of Industries Encouraging Foreign Investment (2019). After the latest revisions, the two negative lists, one for the piloted FTZs and one for the rest of the country, contain fewer access-limiting measures. Pilot FTZs now have 37 listed items for foreign investors, down from 45, while non-FTZ areas are required to implement 40 items instead of 48. There are three prominent changes. The service sector will see greater opening-up; market access restrictions will be eased in agriculture, mining and manufacturing industries; pilot FTZs will continue to play experimental roles in reform and opening-up. There are three significant changes to the Catalogue of Industries Encouraging Foreign Investment, including substantially increasing more areas where foreign investments are encouraged, encouraging foreign investors to push for high-quality development of China's manufacturing sector, and encouraging foreign investment in production-based service companies.

Premier Li Keqiang chaired a State Council executive meeting on July 3, 2019. The meeting said the Chinese government will support pilot free trade zones in undertaking more experiments with reform and opening-up, and refine policy incentives for cross-border e-commerce to facilitate more innovative models in foreign trade. On top of the 35-existing cross-border e-commerce zones, such zones will be launched in more cities in light of local needs. Retail goods that are exported from these pilot zones will see their value-added tax exempted in the absence of a valid purchase certificate. Simpler methods for verifying and collecting corporate income tax will be introduced.

The General Administration of Customs recently issued the Announcement about Implementing the Catalogue of Industries for Encouraging Foreign Investment (2019 Version). According to the announcement, starting from July 30, 2019 for foreign investment projects covered by the catalogue, import tariff will be exempted for self-use equipment, technology and components to be used in these projects, unless these products are listed in the Catalogue of Imported Products concerning Foreign-invested Items Without Duty Exemption and the Catalogue of Key Technological Equipment and Products Not Exempted from Tax in Imports. Value-added tax will continue to be collected for such products in the import process.