September 2021 / China

27 Settembre 2021

Legislation of Urban Maintenance and Construction Tax and Clarification for its Taxation Basis

The Law of the People's Republic of China on Urban Maintenance and Construction Tax, adopted at the 21st Session of the Standing Committee of the 13th National People's Congress on August 11, 2020, shall come into force as of September 1, 2021.   State Tax Administration announced as follows to clarify the matters including the method for the determination of the basis for urban maintenance and construction tax:
  1. The calculation of urban maintenance and construction tax shall be based on the amounts of value-added tax ("VAT") and consumption tax (hereinafter referred to as the "Two taxes") actually paid by taxpayers according to law. But the basis shall:
  2. Add the amount of “exempted & offset VAT”;
  3. Exclude the Two Taxes paid due to import of goods or sale of labor services, services and intangible assets within the territory by overseas entities and individuals;
  4. Deduct the amount of the Two Taxes directly exempted & reduced and the amount of refunds of VAT credit at the end of the period. The amount of the “Two Taxes directly exempted & reduced” shall exclude the amount of the Two Taxes refunded under the methods of "return after collection", "refund after collection" and "refund upon collection".
  5. The basis for calculation and collection of education surcharge and local education surcharge shall be the same as that for calculation of urban maintenance and construction tax.
Chinese reference could be found in STA official website:
27 Settembre 2021

Further Notice on Urban Maintenance and Construction Tax

The State Taxation Administration released on August 31, 2021 the Announcement on Matters Related to the Collection and Management of Urban Maintenance and Construction Tax, to be implemented from September 1, 2021. It is a supplementary announcement regarding the matters in our earlier email below. It further announces that:

  1. The taxpayer shall deduct the returned tax credits from the tax calculation basis for Urban Maintenance and Construction Tax in the next period from the date of receipt of the returned tax credit.
  2. The amount of returned tax credits is only allowed to be deducted in the urban construction tax calculation basis determined in accordance with the general VAT calculation method. The balance not fully deducted in the current period shall be continued to be deducted in the subsequent period according to relevant provisions.
  3. Small-scale VAT taxpayers who correct and mend the Urban Maintenance and Construction Tax which tax basis is determined using general tax method before, are allowed to deduct the balance has not been deducted.
  4. For the urban construction tax payable for “Exempted & offset” VAT, taxpayers shall declare and pay it to the competent tax authorities in the next period approved by tax authorities for “VAT of exempted & offset ”.
  5. The term of tax obligation for urban maintenance and construction tax is the same as that for VAT and consumption tax. If a taxpayer has paid more VAT and consumption tax than it's required to and it has received tax rebate, the overpaid urban maintenance and construction tax shall be rebated as well. Unless otherwise stipulated, the urban construction tax attached to the two taxes shall not be refunded if the two taxes are first under the methods of "return after collection", "refund after collection" and "refund upon collection".

Chinese reference could be found in STA official website:

27 Settembre 2021

STA Clarifies Preferential Policy on R&D Expense Deductions

The State Taxation Administration released on September 14, 2021 the Announcement on Further Implementing the Policy of R&D Expense Deductions. The announcement applies to tax deductions for 2021 and subsequent years.

There are three key points in the announcement. The first is to allow taxpayers to enjoy preferential policy on R&D expense deductions for the first three quarters when they make prepaid tax declarations in October; the second is to optimize and streamline account books on R&D expenses, and taxpayers can use the 2015 or 2021 version of account books; the third is to optimize how to calculate "other related expenses" on R&D projects, so as to increase tax deductions.

More detailed information could be found in Chinese at STA official website at:

And STA also provides its official explanation on the announcement at:

27 Settembre 2021

Canton Fair to kick off in October

The 130th session of the China Import and Export Fair, also known as the Canton Fair, is scheduled to kick off on Oct. 15 in south China's Guangdong Province, with both online and offline activities, said the organizer Wednesday.

It will be the fair's first time to resume offline activities following the previous three virtual events held in 2020 and April 2021 due to the COVID-19 impact. The new session will be themed "dual circulation," which refers to China's new development paradigm where domestic and overseas markets reinforce each other, with the domestic market as the mainstay.

About 100,000 exhibitors are expected to participate offline, and over 200,000 buyers will purchase goods on-site, said Zhang Jinsong, head of the provincial department of commerce.

Meanwhile, the event will hold 52 online promotion activities targeting buyers from 40 countries and regions, said Chu Shijia, deputy director and secretary-general of the fair.

Founded in 1957, the Canton Fair is seen as a significant barometer of China's foreign trade. The 129th session attracted approximately 26,000 companies showcasing more than 2.76 million exhibits.


27 Settembre 2021

China steps up fiscal support for Yangtze River Economic Belt

China will provide fiscal incentives to support the high-quality development of the Yangtze River Economic Belt, with funds set aside to finance green projects, the Ministry of Finance said Friday.

According to the detailed plan released on its website, the ministry will increase transfer payments to key areas of ecological significance in the region, guide funds to support pollution control, and direct investments from the National Green Development Fund into green projects in the region.

The ministry also vowed to improve infrastructure in the region, and it plans on mobilizing investment from the central budget to finance local water conservancy and waterway construction projects.

Local governments are encouraged to issue bonds for major public welfare projects under the premise that risks are under control, the ministry said.

It also voiced support for accelerated development of opening-up platforms and faster transition towards innovation-driven development in the region.

The Yangtze River Economic Belt covers nine provinces and two municipalities, accounting for more than 40 percent of the country's population and economic aggregate.

China's top leadership has called for efforts to turn the economic belt into the country's main focus for green development, the major artery for a smooth "dual circulation" of domestic and international markets, and the main force spearheading high-quality economic development.

27 Settembre 2021

China eyes creating safe, efficient int’l air logistics chain

China's civil aviation authorities are trying to create a safe and efficient international air logistics chain, according to the Civil Aviation Administration of China (CAAC).

Pushing forward under strict epidemic prevention and control policies, the move will boost the rapid and healthy development of the country's air logistics industry, said the CAAC.

The CAAC will make efforts to strengthen support, improve the industrial structure and develop a friendly environment for the air logistics sector, which helps sustain the domestic supply chain and facilitate the "dual circulation" of domestic and international markets.

Air cargo transport plays an important role in emergency medical supplies delivery in the fight against COVID-19, as well as sustaining the domestic and global supply chain.

In the first half of 2021, China's civil aviation industry handled more than 3.74 million tonnes of air freight, a 6.4 percent rise from the corresponding period in 2019, before the pandemic.


27 Settembre 2021

Economic Watch: Emerging opportunities, policy backdrop to further unleash China’s consumption potential

Although China's consumer market slackened amid the recent COVID-19 resurgence and floods, emerging opportunities and the consolidated policy backdrop will lend steam to the country's consumption growth looking ahead.

The epidemic situation and floods hindered travel and held back consumption during the summer holiday, sending the year-on-year growth rate of retail sales of consumer goods to 2.5 percent in August, down by 6 percentage points from July, according to the National Bureau of Statistics (NBS).

Acknowledging the short-term factors weighing on August's consumption performance, NBS spokesperson Fu Linghui Wednesday told a press conference that the overall stable recovery momentum of consumption has not wavered.

The cumulative growth of retail sales in the first eight months remained sound, at 18.1 percent, Fu noted, adding that the two-year-average growth rate slightly eased from that in the first seven months to 3.9 percent, maintaining overall stability.

Among the retail sectors surveyed by the NBS, online consumption remained vibrant, with sales in consumption-upgrade sectors squeaking out growth in August, according to Fu.

In the first eight months, online sales of physical goods expanded by 15.9 percent year on year, accounting for 23.6 percent of the total retail sales during the period.

In August alone, sales of goods in consumption-upgrade sectors, including sports and entertainment goods, and cultural goods and office utilities, both grew faster than in July, surging 22.7 percent and 20.4 percent from a year earlier, respectively, the NBS data shows.

Citing the aforementioned data, Fu told the press conference that the consumption scale is still expanding, while the consumption structure is upgrading and new growth drivers are developing.

In the meantime, China's consumer market also boasts great growth potential, especially in the sectors of eco-friendly and smart products, as well as those related to the elderly population.

To unleash the consumption potential, Fu said the country will strengthen effective supply by expanding production scales of smart home appliances and low-carbon products to meet people's aspirations for a better life.

The spokesperson is optimistic about future consumption activities, citing the upgrading demands of the large middle-income group of over 400 million people as an important factor at the press briefing.

Also noticing the short-term pressure on the country's consumer market, the country's top economic planner pledged to strengthen cooperation with relevant departments on the overall planning of consumption activities.

Supervision will be optimized to improve the consumption environment, Chang Tiewei, an official with the National Development and Reform Commission told a press briefing Thursday, adding that the market order will be further regulated to give consumers confidence in spending.

Reforms to spur consumption vitality, including removing administrative limits on shopping activities and relaxing market entry to the service consumption sector, will also be promoted, while weak links in logistics and e-commerce systems in rural areas will be strengthened, Chang added.

Also being optimistic about the future market prospects, Chang said that as COVID-19 is brought under control and consumption-promotion policies gain more steam, consumption will maintain restorative growth momentum later this year.

"Consumption will still serve as the cornerstone of China's economic development," the NBS spokesperson Fu Linghui noted, expecting the epidemic-control efforts to take hold and the consumption environment to continue to improve.