June 2022 / China

June 29 2022

Guangdong Unveils Preferential CIT Policies in Hengqin Zone

The Department of Finance of Guangdong Province released on June 1, 2022 the Circular of the Ministry of Finance and the State Taxation Administration on Implementing Preferential Corporate Income Tax Policies in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin ("Hengqin Zone"), with retroactive effect on January 1, 2021.

It is clarified that corporate income tax ("CIT") on qualified industrial enterprises in Hengqin Zone would be levied at a reduced rate of 15%, and the tax can be waived on eligible companies in the tourism, modern service and high-tech sectors in the Zone for their income from new overseas direct investments. It is further specified that, enterprises in the Zone may include their cost of no more than 5 million yuan for purchase of fixed assets or intangible assets (including self-built or self-developed assets) in one-off cost of the current period for tax deduction, and can accelerate the depreciation or amortization of new purchase costing over 5 million yuan.

June 14 2022

China Further Deepens Opening-up in Nansha, Guangzhou

The Chinese government released on June 14, 2022 the Overall Plan on Promoting the Comprehensive Cooperation among Guangdong, Hong Kong and Macao by Further Deepening Opening-up in Nansha District of Guangdong Province.

The Plan will be implemented in the whole area of Nansha district, with Nanshawan, Qingsheng hub and Nansha hub in the southern areas of China (Guangdong) Pilot Free Trade Zone serving as the launching areas in the first phase. It proposed to build industrial cooperation bases for sci-tech innovation, implement preferential import tax policies to support sci-tech innovation, and extend the number of years for carry-over of losses in high-tech enterprises or enterprises in key sectors. The corporate income tax would be levied at a reduced rate of 15 percent for enterprises in sectors encouraged, and the catalog of industries for preferential policies would be formulated according to the procedures. Residents from Hong Kong or Macao who are working in Nansha would be exempted from the individual income tax for their portions of income in a tax burden higher than that in Hong Kong or Macao.

Reference: http://www.gov.cn/zhengce/content/2022-06/14/content_5695623.htm

June 1 2022

Shanghai Rolls out 50 Measures to Boost Economic Recovery

The Shanghai Municipal People's Government released on May 29, 2022 the Action Plan of Shanghai Municipality on Speeding up Economic Recovery and Revitalization, rolling out 50 measures. The Plan will come into force on June 1, 2022 and remain effective until the end of 2022. Taxpayers in difficulty of paying property tax and urban land use tax due to impact of the Covid-19 can apply for reduction or exemption of the two taxes on self-used property and land for the second and third quarters of 2022, except for taxpayers in restricted or discouraged industries. Those enterprises whose property or land is requisitioned by the government for emergency are entitled to reduction or exemption of the related property tax and urban land use tax. Companies and social organizations are encouraged to ask travel agencies to conduct party building, official affairs, trade unions, and exhibitions activities on their behalf, and the travel agencies can issue invoices as reimbursement vouchers, said in the Plan.   Official Notice: https://www.shanghai.gov.cn/nw12344/20220529/c931ca8e68cd434293e122204c61ecc8.html
June 29 2022

STA Clarifies on Enterprise’s Access to Preferential Policy for Additional Deduction of R&D Costs in Declaration of Corporate Income Tax

The State Taxation Administration ("STA") released on May 31 2022 the Announcement on Matters Concerning Enterprise's Access to the Preferential Policy for Additional Deduction of Research and Development (R&D) Costs in Declaration and Prepayment of Corporate Income Tax (No.10 in 2022), with retroactive effect on January 1, 2022.

Compared with the 2021 rules, the new rules have kept the policy access timing and procedures unhanged. Specifically, an enterprise may decide on their own to access the preferential policy for additional deduction of R&D costs incurred in the first three quarters earlier when it declares for prepayment of the corporate income tax in October. If it does not choose to access the policy earlier, it may access the policy combined when it handles annual final settlement. An enterprise's access to the policy for additional deduction of R&D costs should be conditional on that "the costs are actually incurred, and the enterprise declares for the access on its own decision, with the relevant materials kept for future reference".

Reference: http://www.chinatax.gov.cn/chinatax/n362/c5175756/content.html

June 16 2022

The upstream and downstream enterprises of tax fraud will be severely punished

On 16th June 2022, the State Administration of Taxation, the Ministry of Public Security, the Supreme People's Procuratorate, the General Administration of Customs, the People's Bank of China, the State Administration of Foreign Exchange held the meeting in Beijing to jointly crack down tax fraud on VAT credit refund and export tax refund.

The meeting stressed that the six departments at all levels should carry out a three-dimensional, full-chain crackdown on the upstream and downstream enterprises of tax fraud, focusing on gang-style, trans-regional, illegal acts of fraudulently issuing invoices to obtain VAT credit rebates and export tax rebates, and severely punish them. The meeting stressed that cases should be handled in accordance with laws and regulations, and that law-abiding enterprises should be risk-free and undisturbed. To the non-subjective intentionally illegal acquisition of tax rebate retention enterprises, to remind them to rectify; An entity enterprise that promptly makes up the tax payment or recovers the tax loss for a first or accidental offense may be given a lenient punishment according to law; Enterprises that maliciously fabricate, falsely issue invoices or fraudulently obtain tax rebates by gangs, especially those involving huge amounts of tax fraud, egregious circumstances and serious harm, shall be strictly and resolutely punished.

Reference: https://mp.weixin.qq.com/s/AHum4sXtUWDa4XF8wJ4CNw

June 3 2022

State Council Decides to Implement a Package of Measures to Stabilize Economic Performance

Premier Li Keqiang chaired an executive meeting of the State Council on May 23, 2022, deciding to adopt a package of measures to stabilize economic performance. The 33 measures concern six aspects.

It is decided that the policy of refunding outstanding and newly added-value added tax (VAT) credits will be extended to more industries, which is expected to increase tax refunds by 140-plus billion yuan. The policy of deferred premium payments of old-age, unemployment and workplace safety insurance programs by micro, small and medium-sized enterprises (MSMEs) in the five hard-hit sectors will be prolonged till the end of this year, and extended to other industries facing serious difficulties. The scale of the support facility for inclusive loans to micro and small businesses, and its share of the increase in the loan balance will both be doubled this year. The payment period of commercial acceptance bills will be cut from one year to six months. Platform companies will be encouraged to list on domestic and overseas markets in accordance with laws and regulations. The industrial and supply chains will be stabilized. Consumer spending and effective investment will be boosted. Car purchase restrictions will be relaxed. The purchase tax of passenger vehicles will be partially cut to the amount of 60-plus billion yuan on a time-limited basis. Energy security will be ensured. The meeting also stressed the imperative to ensure basic livelihood.

Reference: http://www.gov.cn/premier/2022-05/23/content_5691961.htm

June 3 2022

China Adopts a Package of Measures to Stabilize Economic Performance

The State Council released on May 31, 2022 the Circular of the State Council on Adopting a Package of Measures to Stabilize Economic Performance.

The policy of refunding value added tax (VAT) credits will be expanded. In addition to the unveiled policy of refunding outstanding VAT credits in full and refunding newly added credits in full on a monthly basis to businesses in six sectors including manufacturing, the country is also exploring to expand the policy to cover businesses in seven other sectors including wholesale and retail, agriculture, forestry, animal husbandry and fishery industries, accommodation and catering, residential services, repair and other services, education, health and social work, culture, sports and entertainment. It also urged to accelerate refunding of VAT credits to micro and small businesses and self-employed individuals, calling for basic completion of the outstanding VAT refunding prior to June 30, 2022 in a centralized manner on the basis of taxpayer's voluntary applications, according to the Circular.

Reference: http://www.gov.cn/zhengce/content/2022-05/31/content_5693159.htm

June 29 2022

MOF and STA Unveil Policy on Reduction of Tax on Purchase of Selected Passenger Vehicles

As a response to the requirement for reduction of vehicle purchase tax for passenger vehicles under certain displacement imposed in the Announcement of the State Council on Adopting a Package of Policy Measures to Stabilize Economic Performance released on May 31, 2022, the Ministry of Finance ("MOF") and the State Administration of Taxation jointly released the Announcement on Reduction of Tax for Purchase of Selected Passenger Vehicles (Announcement (2022) No.20 of the MOF and the STA).

It is clarified that the vehicle purchase tax can be halved for purchase of passenger vehicles in displacement of 2.0-liter or below during the period from June 1, 2022 to December 31, 2022 at a unit price (excluding VAT) of not exceeding 300,000 yuan, and the passenger vehicles refer to vehicles designed to carry passengers and their carry-on luggage and/or temporary goods, with seats of no more than nine, including the driver's seat.

Reference: http://szs.mof.gov.cn/zhengcefabu/202205/t20220531_3814723.htm