September 2020 / China

The State Taxation Administration released on September 18, 2020 the Announcement about Issues Related to Credit Management on Tax Payment, to be implemented from November 1, 2020.

The announcement launched four measures to optimize credit management on tax payment, that is, adding non-independent branches to voluntarily participate in credit evaluation of taxpayers, adding a mechanism to review credit evaluation indicators, adjusting the application rules for taxpayer credit evaluation, and relaxing the measure of keeping D rating for two years. The announcement released a new application form of credit review; if a taxpayer disputes evaluation result, it can fill the form before March of the next year to apply for a review.

The State Council released on September 21, 2020 the Circular about Overall Plan for New Pilot Free Trade Zones in Beijing, Hunan and Anhui and Expanding the China (Zhejiang) Pilot Free Trade Zone. The China (Beijing) Pilot Free Trade Zone covers three areas of science-tech innovation, international commerce services and high-end industries. The zone will promote the coordinated development strategy of the Beijing-Tianjin-Hebei region, build itself into a science-tech innovation center with global influence, and accelerate the construction of demonstration zones to open up more services and pilot areas to develop digital economy. China (Zhejiang) Pilot Free Trade Zone will be expanded to cover three parts in Ningbo, Hangzhou and Jinyi.

The Ministry of Finance and the State Taxation Administration recently released the Circular about Value-added Tax Rebate Policies for International Transport Ships at the Hainan Free Trade Port. The circular will take effect from October 1, 2020 until December 31, 2024.

According to the circular, domestic shipbuilders can apply for value-added tax rebates if they sell ships to companies operating shipping services on the international market and in Hong Kong, Macau and Taiwan. The tax rebate applications shall be filed by ship buyers, and the tax rebates shall be equivalent to the amount of value-added tax bills when the ships were purchased. The circular also specified document requirements for tax rebate applications.

The State Council released on September 21, 2020 the Decision to Cancel and Delegate Power for Some Administrative Licensing Items. According to the decision, the State Council will cancel requirement for government review on 29 items and delegate power on four items.

Among them, the permit for opening corporate bank account is scrapped. The People's Bank of China (PBOC) should ask commercial banks to conduct online examinations of corporate bank account applicant's business registration, staff and tax payment information, and report the data to the PBOC. If enterprises and individuals are found to have illegally sold corporate bank accounts, they should be barred to open new accounts or suspended to get non-counter services.

In the first seven months of 2020, China became the top trading partner of the European Union (EU), a position previously held by the United States, said Eurostat on Wednesday.

EU's imports from China increased by 4.9 percent in the January-July period, compared to the same period last year, whereas its imports from the U.S. dropped by 11.7 percent.

The bloc's exports to China recorded a slight drop of 1.8 percent, while those to the U.S. fell by 9.9 percent, according to the EU's statistical office.

China and U.S. were followed by the United Kingdom, Switzerland, and Russia on EU's main trading partner list in the first seven months.

In accordance with the world's changing epidemiological situation during the first seven months, the EU's international trade started to fall in January, and regained momentum after May, when confinement measures were gradually eased.

In July, EU exports out of the bloc stood at 168.5 billion euros, down by 11.3 percent compared to July 2019, and its imports from the rest of the world reached 142.6 billion euros, down by 16 percent year-on-year, according to Eurostat estimates.

http://en.people.cn/n3/2020/0917/c90000-9761215.html

Since China's resource tax law was formally implemented on September 1, 2020, the five resource and environmental taxes – the vehicle and vessel tax, environmental protection tax, tobacco tax, tax on the occupancy of cultivated land and the resource tax – have all been enacted.

Liu Yi, deputy director of the Property and Behavior Tax Department of the State Taxation Administration, said that the new resource tax law has six changes compared to the original resource tax system.

Expanding the scope of tax collection

The expression covering the scope of taxation for resource taxes changes from "the exploitation of mineral products and the production of salt” to "the exploitation of taxable resources." The law authorizes the State Council to levy a water resource tax for pilot units and individuals who use surface water or groundwater, in accordance with the needs of national economic and social development, providing a legal basis and reserving room for reform of water resource management.

Standardizing and detailing tax items

A total of 164 taxable resources items are listed in the Tax Item and Tax Rate Table attached to resource tax law, covering all the minerals discovered so far.

Regulating the management of tax reductions and exemptions 

Chin's resource tax law clarifies effective, long-term tax reduction and exemption policies, such as exempting the resource tax on coal mining enterprises for safe production to extract coal into gas and reducing the resource tax for low-abundance oil and gas fields.

Clarifying the permission division methods of the different tax rates 

The tax law directly determines the fixed tax rates for strategic resources such as crude oil, natural gas, medium and heavy rare earths, tungsten and molybdenum. Other taxable resources are subject to a tax rate range, which is determined by the tax law. Meanwhile, the provincial governments are authorized to propose a specific tax rate for their region and report to the Standing Committee of the People's Congress at the same level for decision.

Clarifying price-based taxation as the main method of resource tax collection

One hundred and fifty-eight of the tax items among the 164 integrands listed by the resource tax law are ad valorem. The other six tax items can be levied through price-based taxation or quantity-based taxation according to the convenience of collection.

Clarifying the different tax rates for crude ores and beneficiation

The resource tax law clarifying the different tax rates of crude ores, and beneficiation not only ensures the fairness of taxation but also promotes tax declaration, which is an optimization of the resource tax system.

  http://www.chinatax.gov.cn/eng/c101269/c5156699/content.html

The Ministry of Commerce released on September 19, 2020 the Provisions on the Unreliable Entity List, with immediate effect.

According to the regulation, the work mechanism can decide to take one or multiple measures against foreign entities on the reliable entity list, and make a public announcement:

1. Restrict or ban its China-related import & export activities.
2. Restrict or ban its investment in the Chinese territory.
3. Restrict or ban the entry into China of its staff or transport facilities.
4. Restrict or revoke its staff's work permit, stay or residential qualifications in the Chinese territory.
5. Impose penalties according to the severity of its unlawful activities.
6. Other necessary measures.

http://english.mofcom.gov.cn/article/policyrelease/questions/202009/20200903002580.shtml