Recent Important Regulation Highlights

Important fiscal and tax regulations to promote stable growth of industrial economy

Recently, China released a new circular to promote steady growth of industrial economy (Fa Gai Chan Ye [2022] No. 273) including following fiscal and tax regulations:

1. Eligible SMEs may choose to apply a one-time pre-tax deduction for equipment with a depreciable life of 3 years, and a 50 percent deduction for equipment with a depreciable life of 4, 5 or 10 years, which are newly purchased in 2022 with a unit value over 5 million yuan;
2. The deferring payment of some taxes and fees for SMEs in the manufacturing industry, which was implemented in the fourth quarter of 2021 is extended for six months;
3. The application scope of relief and exemption of “six taxes and two fees” will be expanded and tax benefits for SMEs will be increased;
4. The implementation of phased reduction of unemployment insurance and work injury insurance will be continued in 2022.

The refund of IIT withholding service fees for 2021 is now OPEN!

From 1 January to 30 March 2022, withholding agents may apply for the refund of IIT withholding service fees for 2021 via the e-Tax. It should be noted that the refunded service fee is subject to Value Added Tax and Corporate Income Tax.

Sole proprietorships and partnerships with equity investments are all subject to IIT on an actual basis

Recently, the Ministry of Finance and the State Administration of Taxation jointly issued the Announcement on the Collection and Administration of Individual Income Tax on Income from Equity Investment. The Announcement clarifies that sole proprietorships and partnerships holding equity investments such as shareholdings, stocks and shares of partnership property shall be subject to IIT on an actual basis. The provision entered into force on on 1 January 2022.

GAC Clarifies Matters Concerning RCEP Implementation

The General Administration of Customs has recently issued the Announcement 2021 No. 106, with effect from 1 January 2022, to clarify matters concerning the implementation of the Regional Comprehensive Economic Partnership (RCEP).