May 2022 / China

May 26 2022

Guangdong Steps up Financial Support for Covid-affected Sectors

The People's Government of Guangdong Province released on April 28, 2022 the Action Plan of Guangdong Province on Stepping up Financial Support for Covid-affected Enterprises to Overcome Difficulties and Keeping Stable Economic Performance.

The Plan called for increasing financial support for Covid-affected sectors, urging financial institutions to support those sectors and micro, small and medium-sized enterprises (MSMEs) by cutting the required reserve ratios. It proposed that local competent departments in charge of accommodation, catering, wholesale and retail, cultural tourism, civil aviation, highway, waterway and railway transport should send a list of enterprises in difficulties to local financial regulators so that they can get more credit support from banks. For those micro and small businesses applying for loans with local corporate financial institutions for the first time from April 1 to June 30, 2022 by relying on the financing platform for SMEs in Guangdong, subsidies on interest payment would be offered at a percentage of no more than 1% for the balance of any single business that does not exceed 10 million yuan.

Official Notice: http://www.gd.gov.cn/zwgk/wjk/qbwj/yfb/content/post_3921023.html

May 26 2022

China’s consumption to recover from epidemic impacts

China's consumption is expected to sustain its recovery momentum as the impact of COVID-19 is gradually brought under control and supportive policies take effect, said an official with the Ministry of Commerce (MOC) Thursday.

In response to a question on the year-on-year decline in China's retail sales in April, MOC spokesperson Shu Jueting said that it was mainly due to the COVID-19 epidemic.

Shu said the impact of the virus on consumption is "temporary" as the strong resilience, great potential and sound long-term development fundamentals of China's consumption remain unchanged.

Official data showed China's retail sales of consumer goods in April declined 11.1 percent from a year ago to 2.95 trillion yuan ($436.9 billion). In the first four months of this year, its retail sales went down 0.2 percent from a year earlier.

Reference: http://www.chinadaily.com.cn/a/202205/20/WS6286f749a310fd2b29e5df76.html

May 26 2022

Shanghai Decides to Conduct the Pilot Program for Fully-Digitalized Electronic Invoices

The Shanghai Municipal Tax Service released on May 20, 2022 its No. 1 Announcement in 2022, deciding to conduct the pilot program for fully-digitalized electronic invoices in Shanghai.

It is clarified that, starting from May 23, 2022, the pilot program for fully-digitalized electronic invoices (E-invoices) will be conducted in selected taxpayers in Shanghai, and the taxpayers should be those using the e-invoice service platform, with the specific scope determined by the Shanghai Municipal Tax Service. The pilot taxpayers are divided into the taxpayers who issue invoices via the e-invoice service platform and the taxpayers who use digital tax accounts via the e-invoice service platform. They may apply to the related provisions of the Announcement based on their specific invoicing requirements and use of the digital tax accounts, and the scope of the drawees to which the invoices are issued via the e-invoice service platform should be the taxpayers within the jurisdiction of the Shanghai Municipal Tax Service.

Reference: http://shanghai.chinatax.gov.cn/zcfw/zcfgk/swzsgl/202205/t462695.html

May 26 2022

China to strengthen multiple supports for small, medium enterprises

China will ramp up multiple policy supports, including cutting costs and increasing funding, to help small and medium-sized companies tide over difficulties, officials told a press conference on Wednesday.

China's small and medium-sized firms logged stable growth in the first quarter of 2022, with the combined revenue and profit of major industrial companies up 14.1 percent and 6.5 percent year on year, respectively, Vice Minister of Industry and Information Technology Xu Xiaolan said.

To address difficulties faced by smaller firms in costs, financing and logistics, local authorities have introduced policies to offer subsidies for spending on rent, utilities, loan repayments and social security premiums, Xu said.

The country has also taken multiple measures to increase inclusive loans and clear arrears for smaller firms, while promoting work resumption at key smaller firms on the industrial chain and boosting market demand.

The ministry will further promote the implementation of the supporting policies, prevent and clear arrears owed to smaller businesses, facilitate the symbiosis of small, medium and large companies, and build a system to nurture high-quality smaller firms, Xu said.

In terms of financing support, China will guide large state-owned banks to offer 1.6 trillion yuan (237.31 billion U.S. dollars) of inclusive loans to micro and small firms this year, said Mao Hongjun from the China Banking and Insurance Regulatory Commission.

The commission will also encourage banking and insurance institutions to increase credit loans and ease the difficulties of loan repayments for smaller firms, and help them better cope with risks by offering tailored services and insurance products.

Reference: https://english.news.cn/20220519/d5b9e5fc31f4441e82814666b37f0eef/c.html

May 26 2022

2022 Catalogue of Industries for Encouraged Foreign Investment under Comment

The National Development and Reform Commission ("NDRC") and the Ministry of Commerce ("MOFCOM") released on May 10, 2022 the Catalogue of Industries for Encouraged Foreign Investment (2022 Edition) (Exposure Draft) for public comment until June 10, 2022.

Compared to the 2020 edition, the 2022 Catalogue added 238 items, revised 114 items (mainly expanding the areas covered by the original items), and deleted 38 items. Its main changes include further encouraging foreign investments in manufacturing, with addition or expansion of components, spare parts, equipment manufacturing and other items in the National Catalogue; further encouraging foreign investment in producer services, with addition or expansion of professional design, technical services and development, and other items in the National Catalogue; and further encouraging foreign investment in the central, western and northeastern regions, with addition or expansion of the relevant items in the Encouraged Catalogue for Western and Central Regions based on the region's advantages in workforce and featured resources, and the needs for attracting investment.

Reference: https://hd.ndrc.gov.cn/yjzx/yjzx_add.jsp?SiteId=380

May 26 2022

China Exempts VAT for Courier Services till the End of the Year

The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") have jointly released the No.18 Announcement in 2022, clarifying the policy of waiving the value-added tax (VAT) for courier and express delivery services.

Specifically, during the period from May 1 to December 31, 2022, the revenues generated by taxpayers from providing residents with courier and express delivery services for essential goods would be exempted from VAT. The specific scope of the services would be subject to the Explanatory Notes on the Sales of Services, Intangible Assets and Immovable Properties as released under the No. 36 Document of the MOF and the STA. Covered by the category of logistics supporting service of the modern services, the services refer to the business activities of related companies in receiving, sorting out, and delivering letters and parcels within the promised time limit.

Official Notice: http://szs.mof.gov.cn/zhengcefabu/202204/t20220429_3807783.htm

May 26 2022

STA Takes Measures to Facilitate Handling of Export Tax Rebates

The State Taxation Administration ("STA") recently released its Announcement on Facilitating Handling of Export Tax Rebates to Promote Stable Growth of Foreign Trade, in order to implement the supporting measures for export tax rebates as unveiled in the STA No.36 document in 2022.

The Announcement refined the required materials and items for streamlined claims of export tax rebates, simplified the tax handling process, and optimized the tax refund management and reminder services for taxpayers to comply with. It also improved the export tax rebate policy for processing trade, saying that processing trade firms entitled to tax exemption, deduction and refunds may convert the carried-over taxes that cannot be exempted, deducted or refunded due to the levying and refund tax rates previously into the corresponding amount of input VAT for rebates after the country implements consistent levying and refund tax rates for export products.

It is stressed that efforts would be made to strengthen the linkage of export credit insurance and export tax rebate policies. Specifically, if, for an export business for which an enterprise declares tax rebates, the enterprise has got export credit insurance payment due to failure to receive the foreign exchange, the export rebates should be processed by regarding the export credit insurance payment as the foreign exchange. It is also clarified that joint efforts would be made to combat illegal and criminal acts such as false exports and fraudulent acts for export rebates to create a better business environment for exporters.

Official Notice:

http://www.chinatax.gov.cn/chinatax/n377/c5174777/content.html

http://www.chinatax.gov.cn/chinatax/n377/c5175044/content.html

May 26 2022

China Starts Refunds of Outstanding VAT Credits to Large Companies Ahead of Schedule

The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") released on May 18, 2022 the Announcement on Accelerating the Implementation of the Policy of Refunding Excess Input VAT Credits at the End of Periods.

It is clarified that the work towards refunding outstanding VAT credits to large companies will start ahead of schedule. It changed Paragraph 2, Article 2 of No.14 Announcement of the MOF and STA in 2022 from that "eligible large companies in manufacturing may apply for one-off refunds of outstanding VAT credits with the tax authorities from the tax declaration period in October 2022" into that "eligible large companies in manufacturing may apply for one-off refunds of outstanding VAT credits with the tax authorities from the tax declaration period in June, 2022." Prior to June 30, 2022, outstanding VAT credits will be refunded to large companies in a centralized manner on the basis of voluntary application of taxpayers.

Reference: http://szs.mof.gov.cn/zhengcefabu/202205/t20220518_3811434.htm