December 2020 / China

The Customs Tariff Commission of the State Council issued a circular on December 23, 2020, saying that from January 1, 2021 China will adjust the most favored nation tariff rates, conventional tariff rates and provisional tariff rates for some import products.

From January 1, 2021 China will adopt provisional tariff rates on 883 import products, and rates are lower than the most favored nation tariff rates. Cancer drugs and materials for making rare disease medicines will be tax-free when they are imported to China; import tariffs on heart valve prosthesis and hearing aid will also be reduced. China will scrap provisional tariff rates on solid waste imports and resume the most favored nation tariff rates. From July 1, 2021 China will trim the most favored tariff rates on 176 information technology products.

Source: http://gss.mof.gov.cn/gzdt/zhengcefabu/202012/t20201223_3636573.htm

Chinese Premier Li Keqiang chaired a State Council executive meeting on December 21, 2020. The meeting decided to continue the policies of allowing small and micro-sized businesses to postpone principal and interest repayments on inclusive loans, and the inclusive credit loan support program.

The meeting pointed out that small and micro-sized firms will be permitted to postpone principal and interest repayments on inclusive loans in the first quarter of next year, and the policy period will be extended as appropriate. Incentives will be put in place for local banks that provide inclusive loans for micro and small enterprises with a deferred repayment period of no less than six months. The incentives will remain at 1 percent of the loan principal. Meanwhile, the inclusive credit loan support programme will be extended from the end of this year as appropriate. Local banks that provide credit loans for micro and small enterprises will be given incentives at 40% of the loan principal.

The meeting also adopted the Regulation for Preventing and Handling Illegal Fundraising (Draft) and the Regulation on the Supervision and Administration of Medical Device (Revision Draft).

Source: http://www.gov.cn/premier/2020-12/22/content_5572293.htm

The General Administration of Customs released on December 23, 2020 the Measures for Customs Administrative Licensing of the People's Republic of China, to be implemented from February 1, 2021.

Customs administrative licensing refers to the approval of customs authorities, based on the application of citizens, legal persons or other organizations to engage in specific activities related to customs supervision and management. The regulation covers administrative licensing items, implementation procedures, standardized management, evaluation and supervision. The regulation is not applicable to the approval of personnel, finance and external affairs by superior customs agency or to public institutions directly affiliated to a customs agency. The Measures of the Customs of the People's Republic of China on Implementing the Administrative License Law of the People's Republic of China, which was published on June 18, 2004, will be revoked when the new regulation takes effect.

The Ministry of Finance, the State Taxation Administration, the National Development and Reform Commission and the Ministry of Industry and Information Technology recently released the Announcement about Corporate Income Tax Policies for Promoting High-quality Development of the Industries of Integrated Circuit and Software.

According to the announcement, eligible integrated circuit companies can enjoy corporate income tax exemptions for as long as ten years; starting from the year of profitability, eligible integrated circuit design companies and software companies can be exempted from corporate income tax in the first five years and pay a lower tax rate of 10% in the following years.

The State Taxation Administration issued an announcement on December 20, 2020, saying that it has decided to use electronic invoices for value-added tax to be paid by newly-registered taxpayers across the entire country, based on the successful application of electronic invoices in three cities - Ningbo, Shijiazhuang and Hangzhou.

According to the announcement, from December 21, 2020, new taxpayers in Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, Chongqing, Sichuan, Ningbo and Shenzhen can issue electronic invoices for value-added tax, and invoice recipients can be entities nationwide. Starting from January 21, 2021, new taxpayers in other places of China can also issue electronic invoices for value-added tax, and invoice recipients can be entities nationwide.

The Ministry of Finance, the State Taxation Administration, the National Development and Reform Commission and the Ministry of Industry and Information Technology recently released the Announcement about Corporate Income Tax Policies for Promoting High-quality Development of the Industries of Integrated Circuit and Software.

According to the announcement, eligible integrated circuit companies can enjoy corporate income tax exemptions for as long as ten years; starting from the year of profitability, eligible integrated circuit design companies and software companies can be exempted from corporate income tax in the first five years and pay a lower tax rate of 10% in the following years.

The Ministry of Finance and the State Taxation Administration released on December 9, 2020 the Announcement about Pretax Deduction of Advertising and Business Publicity Expenses, to be effective from January 1, 2021 until December 31, 2025. The previous edition of the announcement issued in 2017 will be revoked from January 1, 2021.

According to the announcement, advertising and business publicity expenses at cosmetics production or sale companies, pharmaceutical & beverage companies (Excluding alcoholic firms) are tax-deductible if the expenses do not exceed 30% of the sales or operating revenue for the current year; expenses in excess of the figure can be carried over and tax-deductible in the following years. Tobacco advertising expenses and business publicity expenses incurred by tobacco companies are not eligible for tax deductions.