November 2024

On November 12th, 2024, the General Administration of Customs (GAC) has prepared the Announcement on Matters Related to Classification Principles and Price Review Principles for Inbound Articles (Draft for Comment) (the "Draft"), which is open for public feedback on any potential impacts on fair competition. The cut-off date for receiving comments is November 17, 2024.

According to the Draft, inbound articles will be classified based on the following principles: articles listed in the Classification Table of Inbound Articles of the People's Republic of China (the "Classification Table") will be classified according to the designated category; articles not listed in the Classification Table will be categorized according to their primary function (or use); and articles that cannot be classified by the above principles will fall under the "Others" category. The Draft also states that the taxable price of an inbound article should be determined based on its actual purchase price. If Customs questions the accuracy of the declared purchase price, or if it cannot be ascertained, or if there is no actual purchase price for an inbound article, Customs will determine the taxable price based on the Taxable Price Table for Inbound Articles of the People's Republic of China or other methods in sequence.

  Source: http://www.customs.gov.cn/customs/302452/302329/zjz/6200897/index.html  

On November 13th, 2024, the Ministry of Finance (MOF) and two other authorities have jointly issued the Announcement on Tax Policies for Promoting the Stable and Healthy Development of the Real Estate Market, while the State Taxation Administration (STA) released the Announcement on Lowering Minimum Prepayment Rates for Land Appreciation Tax (collectively the "Announcements"), both policies will take effect on December 1, 2024.

According to the Announcements, for the deed tax, the current preferential low tax rate of 1% will apply to properties with an area of up to 140 square meters, up from the previous threshold of 90 square meters. Additionally, Beijing, Shanghai, Guangzhou, and Shenzhen will be allowed to apply the same deed tax preferential policy for second homes as other regions. After the adjustment, individuals purchasing their first or second home with an area not exceeding 140 square meters will pay the deed tax at a uniform rate of 1%, nationwide. Regarding the land appreciation tax, the minimum prepayment rates for land appreciation tax will be uniformly reduced by 0.5 percentage points across all regions, with local authorities permitted to adjust the actual prepayment rate based on local conditions.

Announcements:

https://szs.mof.gov.cn/zhengcefabu/202411/t20241113_3947450.htm https://fgk.chinatax.gov.cn/zcfgk/c100012/c5235810/content.html

Three departments, including the Ministry of Finance (MOF), have released the Circular on Expanding the Implementation Scope of the Port-of-Departure Tax Refund Policy (the "Circular").

According to the Circular, containerized goods of eligible export enterprises that are declared for export at the place of departure ("port of departure") and transported by China State Railway Group Co., Ltd. and its subsidiaries via trailway transit directly to the place of exit ("port of exit") will be eligible for the port-of-departure tax refund policy. Wuxi (Jiangyin) Port, Shantou Port in Shantou City, and Huadu Port in Guangzhou City are newly added as the ports of departure under the policy. However, hazardous goods shall not be covered by the policy.

Circular:

https://szs.mof.gov.cn/zhengcefabu/202411/t20241114_3947558.htm

The State Taxation Administration (STA) issued the Announcement on Promoting the Use of Fully Digitalized Electronic Invoices (the "Announcement") on November 12th, 2024, effective from December 1, 2024.

According to the Announcement, digitalized electronic invoice is a new type of invoice characterized by the comprehensive digitalization of invoice elements, nationwide unified numbering, intelligent allocation of invoicing limits, and automatic circulation of information between taxpayers and taxation authorities through digital tax accounts or by other means, with the same legal validity as paper invoice. The Announcement specifies that these invoices are single-copy and exist in digital form. Their categories include electronic invoice (VAT special invoice), electronic invoice (general invoice), electronic invoice (electronic air passenger itinerary), electronic invoice (railway electronic ticket), electronic invoice (uniform invoice for motor vehicle sale), and electronic invoice (uniform invoice for used car sale), among others. The Announcement further clarifies that taxation authorities shall establish a nationwide unified electronic invoice service platform, offering free invoicing and usage services for digitalized electronic invoices.

Announcement:

https://fgk.chinatax.gov.cn/zcfgk/c100012/c5236067/content.html

On November 15^th, 2024, the Ministry of Finance (MOF) and the State Taxation Administration (STA) issued the Announcement on Adjustments to Export Tax Refund Policies (the "Announcement"), effective from December 1, 2024.   Matters relating to adjustments to export tax refund policies for aluminum and other products are hereby announced as follows:

• Cancel the export tax refund for aluminum, copper and chemically modified animal, vegetable or microbial oil, grease and other products. See Appendix 1 for the list of products.
• The export tax refund rate for some refined oil products, photovoltaic products, batteries and some non-metallic mineral products is reduced from 13% to 9%. See Appendix 2 for the list of products.
• This Announcement shall come into force as of December 1, 2024. The export tax refund rate applicable to the products listed herein shall be determined based on the export date indicated on the customs declaration form for exported goods.

Appendices:

• List of Products for which Export Tax Refund is Cancelled
• List of Products for which Export Tax Refund Rate is Reduced

  Announcement: https://fgk.chinatax.gov.cn/zcfgk/c102416/c5235887/content.html

The official document is available here: Summary of Responses - Public Consultation on the Draft e-Tax Guide

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The Federal Council has discussed a proposal to extend the period in which companies can offset tax losses from 7 to 10 years. The measure was designed to support businesses affected by the COVID-19 crisis. Despite being backed by Parliament and enjoying broad political support, the government has decided not to move forward with it. The decision stems from concerns about public finances, which are currently under significant strain. While the extension would benefit certain companies, it would also result in reduced tax revenues for the Confederation, Cantons, and Municipalities. The Federal Council believes that more pressing priorities need to be addressed and prefers to consider this issue within a broader fiscal strategy rather than making immediate changes.