VAT and Business Tax (BT) are the two most important indirect taxes in the PRC, together accounting for a substantial part of total tax revenue. Under current system for goods and services, VAT is imposed on sale of goods and certain services (processing of goods and repair and replacement services), and BT is imposed on [Read More]
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U.S. companies without an office in China providing services to Chinese customers are reminded to confirm whether they must comply with reporting and/or filing requirements that apply non-resident service providers. Although promulgated in 2009, Circular 19 applies not only to China-sourced service and passive income of non-resident companies, but also to turnover taxes on China-sourced [Read More] The State Council issued China’s 12th Five-Year Plan, which was jointly drafted by eight government agencies, is aimed at transforming China’s industrial sector, encouraging outsourcing serves, promoting non-polluting, energy efficient industries and, expanding domestic consumption of services. China also encourages investment in central and western areas by providing more favorable investment incentives for foreign companies [Read More] The Ministry of Commerce (MOFCOM) and National Development and Reform Commission (NDRC) recently issued the fifth Foreign Investment Industrial Guidance Catalog (Investment Catalog), replacing the 2007 version. Like previous versions, the new Investment Catalog, effective from January 30, divides industries into three categories, encouraged, restricted or prohibited. Industries not falling in these categories are permitted to foreign [Read More] Unlike previous Five-Year Plans, which had substantial sections on guiding foreign investment, the latest Plan focuses on large infrastructure projects, environmental protection and sustainable industries. Foreign investment is encouraged in competitive industries and SEIs in the central and western regions. Chongqing, Chengdu, Sichuan, Qinzhou, Guangxi and Xi’an will build special customs districts, and special zones [Read More] As background, many long-standing investment incentives in China that were formerly available to foreign-investment enterprises were eliminated in the 2008 revision of Enterprise Income Tax Law. However, HNTEs that are able to score well in a four-factor evaluation, including ownership of core intellectual property rights, can qualify for a reduction of the enterprise income tax (EIT) [Read More] As reported in past issues of the Technology Bulletin, China has gradually responded to indigenous innovation product (IIP) requirements, which in practice often favored local over foreign and foreign-invested suppliers. During a visit to the U.S. in January, 2011, President Hu made a commitment to delink indigenous innovation requirements from government procurement, and many local [Read More]
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