Recent Important Regulation Highlight

China Issued New Consumption Tax Law

On 3 December 2019, the Ministry of Finance (“MOF”) and the SAT jointly issued the "Consumption Tax Law (Draft for Comment)". The Draft for Comment includes nine aspects of consumption tax, i.e. taxpayers, taxable items and tax rates, calculation of the payable tax, taxable values, deduction regulations, tax reliefs, time of tax obligation, administration of tax levies, pilot reform on consumption tax.

SAT Cancels the Time Limit for Verification and Confirmation of VAT Crdit Vouchers

For special VAT invoices, special customs certificates for import VAT payments, unified invoices for the sale of motor vehicles, electronic general VAT invoices for tolls issued on and after 1 January 2017 and received by the VAT general taxpayers, the time limit for verification and confirmation, check and comparison, and declaration for deductions, will be cancelled. The regulation comes into force on 1 March 2020.

Fifth Protocol to Mainland-Hong Kong Double Taxation Agreement Entered into Force

The Fifth Protocol of the Double Taxation Agreement (DTA) between Mainland of China and the Hong Kong Special Administrative Region came into force on 6 December 2019. In Mainland China, it shall apply to the income derived in the taxable years beginning on or after 1 January 2020, and in the HKSAR, to income derived in the years of assessment beginning on or after 1 April 2020. The Fifth Protocol introduces some revisions in two aspects, including incorporating the results concerning Base Erosion and Profit Shifting (BEPS) and adding a new article in respect of "teachers and researchers".

E-Registration for Overseas Payments

According to the latest news from the SAT, e-registration for overseas payments has been realized nationwide from 1 January 2020. The enterprises only need to log onto the e-tax system, select the “tax registration of overseas payments" module to fill in the payment registration information. The registered payment information can be verified online at the bank terminal and therefore the enterprises do not need to submit the paper form to the bank as previously.

Shanghai/China: 4 Measures for Enterprises in Shanghai due to the Epidemic Situation

As the novel corona virus outbreak brought certain losses to the enterprises, on 3 February, the Shanghai government issued four measures to reduce the enterprises’ burden:

1. In 2020, for enterprises that do not lay off employees, do not reduce the number of employees and meet certain requirements, 50 per cent of the total amount of unemployment insurance premiums actually paid by employers and employees in the previous year shall be returned.
2. Starting from 2020, the payment year of social security shall be adjusted to 1 July of the current year to 30 June of the following year, which is postponed for three months.
3. For enterprises that cannot pay social security timely due to the outbreak, no late fees will be charged.
4. Enterprises can receive 95 per cent subsidy according to the actual training cost for qualified vocational trainings during the outbreak period.