Recent Important Regulation Highlight

Simplified Deregistration for Micro, Small and Medium-sized Enterprises

On 30 July 2021, the State Administration for Market Regulation and the State Taxation Administration issued the Circular on Further Improving Simplified Deregistration to Facilitate Market Exit for Micro, Small and Medium-sized Enterprises. The Circular clarifies that the application scope of simplified deregistration will be extended to include market entities that have no claims or debts, or those who have fully settled their claims and debts, for which the public announcement period is reduced from 45 days to 20 days.

High-level Reform and Opening-up in Shanghai Pudong New Area

On 15 July 2021, the State Council released the Opinions on Supporting the High-level Reform and Opening-up in the Pudong New Area and Building it into a Pioneer Area for Socialist Modernization, with taxation-related policies as follows:

1. Eligible enterprises in specific regions of Pudong New Area who play a key role of the supply chain, i.e. are engaged in the production and research and development of crucial industries such as integrated circuits, artificial intelligence, biomedicine and civil aviation, can benefit from a reduction in the Corporate Income Tax rate to 15 percent for the first five years starting from the date of establishment.
2. A pilot program for preferential income tax policies for venture capital enterprises is carried out in specific regions of Pudong New Area. During the pilot period, eligible corporate venture capital enterprises are exempted from CIT in proportion to the shareholding of individual shareholders at the end of the year.

Update on Record-filing Policies on Overseas Payment for Service Trade

On 29 June 2021, the State Taxation Administration and the State Administration of Foreign Exchange jointly released the Supplementary Announcement on Issues concerning the Record-filing for Taxation on Overseas Payment for Service Trade and Others, which stipulates that foreign investors are not required to conduct record-filing for taxation if the reinvestment is made in China and by using the legal income obtained from foreign direct investments in China.

Shorter Tax Refund Process for Exports for Foreign-invested Enterprises

Recently, six authorities including the Ministry of Commerce have issued the Circular on Stepping up Financial Relief for and Supporting the Development of Market Entities in Offline Retail, Accommodation and Catering, Foreign Investment and Foreign Trade Sectors. It is proposed in the Circular that local tax authorities shall speed up export tax refund process and further reduce the average processing time for normal export tax refunds to seven working days in 2021.

GAC Publishes Administrative Provisions of the Customs on the Classification of Imported and Exported Goods

Recently, the General Administration of Customs has issued the Administrative Provisions of the Customs on the Classification of Imported and Exported Goods, with effect on 1 November 2021. Under the Provisions, the customs office may, when necessary, conduct laboratory tests and inspections on the attributes, ingredients, content, composition, quality, specifications, etc. of imported and exported goods in accordance with the Tariff Schedule for Imports and Exports and its annotations, national standards, industry standards, customs testing methods, etc., and use the result as the basis for commodity classification.

Electronic Special VAT Invoices

Since 21 January 2021, the usage of electronic special VAT invoices has been fully implemented nationwide. Only newly registered taxpayers can issue electronic special VAT invoices, where electronic signatures are used instead of special VAT invoice seals. When issuing special VAT invoices, taxpayers can issue both electronic invoices and paper invoices.