November 2018 / China

Shanghai municipal government released on November 22, 2018 the Opinions about Accelerating the Development of High-tech Enterprises in Shanghai. The document proposed a raft of measures to support high-tech firms, including cutting taxes and reducing burdens. According to the document, the city will implement existing preferential tax policies granted to high-tech companies to reduce their business cost. High-tech firms and tech-based small and medium-sized firms are allowed to carry forward losses for ten years. Scientific researchers are encouraged to commercialize their research achievements, and stock options awarded to them can be eligible for installed or deferred payments of individual income tax.

The Shanghai Head Office of the People's Bank of China (PBOC) recently issued the Guideline about Further Strengthening Financial Services to Private Enterprises and Technology Innovation Enterprises. The document proposed 20 measures to support private and tech firms. Among them, at least 10 billion yuan of re-lending quota will be granted to private and small firms committed to technology innovations and advanced manufacturing, and rediscount subsidies will be prioritized to technology-based small businesses with loan amount of 5 million yuan or less. Startups borrowing less than 500,000 yuan will not have to provide collateral for the loans; the maximum amount of loan for a corporate borrower is doubled to 2 million yuan.

It was learned from the State Council executive meeting that, starting from January 1, 2019, the current policies on cross-border e-commerce retail imports will continue. No requirements in licensing, registration or record-filing for first-time imports will apply to retail imports through cross-border e-commerce platforms. Instead, these goods will receive more relaxed regulation as imports for personal use. Moreover, implementation of this policy will be extended from the 15 cities such as Hangzhou to another 22 cities which have just established comprehensive cross-border e-commerce pilot zones. Goods included in the cross-border e-commerce retail imports list have so far enjoyed zero tariffs within a set quota and had their import VAT and consumer tax collected at 70 percent of the statutory taxable amount. Such preferential policies will be extended to another 63 tax categories of high-demand goods. The quota of goods eligible for the preferential policies will be raised from 2,000 yuan to 5,000 yuan per transaction, and from 20,000 yuan to 26,000 yuan per head per year.

The State Administration of Taxation recently issued the Announcement about Deductions of Liability Insurance Premiums on Corporate Income Tax. According to the announcement, enterprises buying employer liability insurance and public liability insurance can file for premium deductions before they pay corporate income tax. The tax arrangement is applicable to corporate income tax payment in the 2018 tax year and following years.