Recent Important Regulation Highlight

published on 27 August 2023 | reading time approx. 3 minutes

China will Further Optimize Foreign Investment Environment

The Chinese State Council has recently issued 24 measures in six aspects to further optimize foreign investment environment and intensify efforts to attract foreign investments:

improve the quality of foreign capital utilization
guarantee the national treatment of foreign-invested enterprises
strengthen the protection of foreign investment
improve the facilitation of investment and operation
increase fiscal and tax support
improve ways to promote foreign investment

Thereof, the increasing fiscal and tax support includes four measures:

Enhancing support through foreign investment promotion funds;
Encouraging FIEs to reinvest within China;
Implementing relevant tax preferential policies for FIEs;
Supporting FIEs in investment in the fields encouraged by the State for development.

Through these measures, the Chinese government aims to further increase the attractiveness for foreign investors and promote growth opportunities for foreign companies in China. This can have a positive impact on additional opportunities for investment and business expansion.

10 Cross-border Measures for Trade and Investment Facilitation

To further deepen the reform and promote cross-border trade and investment facilitation, the State Administration of Foreign Exchange has recently released the draft for public comments. The measures to be rolled out include 10 aspects, which aims to improve the opening-up measures for cross-border trade, expand capital account facilitation measures and optimize foreign exchange management measures under the capital account.

The following measures are included in the draft:

increasing the flexibility of the exchange rate
improving access to foreign exchange
facilitating capital flows
improving transparency
strengthening international cooperation
expanding the use of foreign exchange accounts
facilitating the export of capital
facilitating the import of capital
strengthening the protection of foreign investment
promoting the use of the RMB in international payments

The public comments are open until 30 September 2023. The final measures will be published after the public comments. We will keep you updated on this and publish the detailed measures and impacts in a timely manner.

Multiple Tax Preferential Measures for Capital Market Development Rolled Out

The Chinese Ministry of Finance and other two departments have jointly issued various tax preferential measures to further the capital market development in China. These measures are applicable to innovative enterprises, Shanghai-Hong Kong, Shenzhen-Hong Kong stock transactions, equity incentives of listed enterprises, individual partners of venture capital enterprises etc., which covers relevant tax policies regarding individual income tax, enterprise income tax, value-added tax, and stamp tax.

IIT Preferential Treatment for Greater Bay Area Extended

Recently, the MOF and the SAT have jointly issued the circular to extend the preferential IIT treatment for the Guangdong-Hong Kong-Macao Greater Bay Area to 31 December 2027.

Deductible Amount Standard of IIT Additional Special Deduction Increased

On 31 August 2023, the State Council has released a circular to increase the deductible amount standard of 3 IIT additional special deduction items, which retrospectively takes effective from 1 January 2023:

For caring for children under age of three, the deductible amount is increased from RMB 1,000 to RMB 2,000 per month for each child;
For children’s education, the deductible amount is increased from RMB 1,000 to RMB 2,000 per month for each child;
For caring for parents older than 60 years, the deductible amount is increased from RMB 2,000 to RMB 3,000 per month.

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