November 2019 / China

Premier Li Keqiang chaired a State Council executive meeting on November 20, 2019 to hear a report about the reform on individual income tax, introduce preferential tax measures to reduce taxpayers' burden, and passed the Law of the People's Republic of China on Urban Maintenance and Construction Tax (Draft). The meeting decided to further lower the tax burden on low- and medium-income groups. It passed a temporary decision to exempt those whose aggregate annual income is no higher than 120,000 yuan within a period of two years from the obligation to declare the settlement and payment of individual income taxes. In order to promote development of the shipping industry and meet the rapidly growing demand for seafood in the domestic market, the meeting decided that taxable income will be reduced by 50 percent for seamen who are at sea more than 183 days a year, from January 2019 through the end of 2023.

The State Administration of Taxation recently released the Announcement on Issues Concerning the Management of Abnormal Value-added Tax Payment Receipts, to be effective from February 1, 2020.   According to the announcement, there are six circumstances of abnormal value-added tax payment receipts, including the missing of the taxpayer, tax devices are stolen and invoices have not been issued or have been issued but not uploaded, and inconsistency between what's written on the invoices and what is indicated on the invoice management system.

The State Taxation Administration recently released the Announcement on Issues Concerning the Verification and Collection of the Income Tax from Retail Exporters in the Cross-border E-commerce Comprehensive Pilot Zones, to be effective from January 1, 2020.   Cross-border e-commerce enterprises verified for collection of corporate income tax in comprehensive pilot zones shall accurately calculate the total income, and the corporate income tax will be determined by the unified taxable income rate of 4%. Where the enterprises meet the preferential policy conditions for small low-profit companies, they can enjoy the preferential income tax policy applicable to them; where their income belongs to the tax-free income as stipulated in Article 26 of the PRC Corporate Income Tax Law, they can enjoy the tax-free policy.

The State Council released the Opinions on Further Improving the Utilization of Foreign Investment on November 7, 2019. The document put forward 20 policy measures in four aspects of deepening market openness to foreign investors, promoting investment, deepening reform to facilitate investment, and protecting the legitimate rights and interests of foreign investors. China will move faster to further open up the financial industry, eliminate all restrictions on the scope of business for foreign banks, securities companies and fund management companies, and remove requirements on total assets for the establishment of foreign-funded banks. In deepening reform to facilitate investment, China will lower the cost of cross-border capital use, make it easier for foreigners to work in China and optimize the approval process for the use of land for foreign-funded projects.