Latest Laws and Regulations


The Administrative Measures for the Establishment of Partnership Enterprises within China by Foreign Enterprises or Individuals
Order of the State Council No. 567

The State Council issued the notification on strengthening the administrative measures for the establishment of partnership enterprises within China by foreign enterprises or individuals on November 25, 2009.
Core Contents

  • The establishment of partnership business herein refers to the establishment of partnership businesses by 2 or more foreign enterprises or individuals, and foreign enterprises or individuals and Chinese natural persons, legal persons and other organizations in China.

  • In the event of establishment of partnership business by Foreign enterprises or individuals in China, they shall directly apply to the local industrial and commercial administration for registration of establishment.
  • The establishment of partnership enterprises by the enterprises or individuals from Hong Kong SAR, Macao SAR and Taiwan shall be subject to the Measures herein.

It shall come into force as of March 1, 2010.

State Administration of Taxation notification on strengthening corporate income tax management on non-resident enterprises equity transfer income No.698 (2009)

The State Administration of Taxation issued the notification on strengthening corporate income tax management on non-resident enterprises equity transfer income on December 10, 2009.
Core Contents:

  • The non-resident enterprise shall declare and pay corporate income tax with the relevant tax administration authority where the Chinese resident enterprise registered at within 7 days after the agreed share transfer date.

  • Specify the tax methods and basis of non-resident enterprises equity transfer.

  • If a non-resident enterprise transfers the equity in a Chinese resident enterprise to a related party and the transfer price is not in line with the arms length principle for the purpose of reducing taxable income, the relevant tax authority holds the right to make adjustment according to general practice.

  • If a foreign investor (actual controlling party) transfers the equity in a Chinese resident enterprise equity indirectly via arrangements such as through the misuse of the corporate form without a reasonable business purpose to avoid corporate income tax liability, the relevant tax authority holds the right to ignore the existence of the offshore holding company used for the tax arrangement.

It shall come into force as of January 1, 2008.

Notice of the State Administration of Foreign Exchange and the State Administration of Taxation on Further Clarifying the Relevant Issues concerning Submitting Tax Certificates for Foreign Payments under Trade in Services and Other Items
No.52 [2009] of the State Administration of Foreign Exchange

It further clarified the usage scope and legal effect of Tax Certificate for Foreign Payments under Trade in Services, Benefits, Current Transfer and Some Capital Items (No. 52 [2009]) (hereinafter referred to as “Tax Certificate”) on November 6, 2009.
Core Contents:

  • Where any domestic institution or individual makes a foreign payment of the foreign exchange capital under the following ten items, such as fees occurred from foreign tourism business, repair costs of offshore fishing occurred aboard, international air and land freight fees, insurance fee, dividend and bonus allocated to offshore companies, no Tax Certificate needs to be handled and submitted.

  • It/He shall apply to the competent tax authority for the Tax Certificate under the following situations:

    (1) foreign investors of foreign invested enterprises use their profits arising domestically and those enterprises’ capital accumulation funds, surplus accumulation funds and unallocated profits vesting to them to domestic capital addition or reinvestment;
    (2) foreign investors use the proceeds from advanced return of investment, liquidation, equity transfer and capital reduction, etc of the foreign invested enterprises they invested to domestic reinvestment;
    (3) enterprises invested by foreign invested enterprises engaging in investments remit profits to those investing enterprises by foreign currencies.

It shall come into force as of November 6, 2009.

In relation to “The Administrative Measures for Identification of Technologically Advanced Service Enterprises in Guangdong Province (Trial Implementation)”
Yuekegaozi (2009) No.143

On November 4, 2009, the High Technology Development and Industrialization Office of the Science and Technology Bureau of Guangdong Province further normalize the administration for the identification of the technologically advanced service enterprises in Guangdong province.
Core Contents:

  • Insuring the identification range and conditions for the technologically advanced service enterprises in Guangdong province consistent with Caishui (2009) No.63.

  • Identification process: log in through network, complete the reporting information, and submit the reporting information to local science and technology authorities in charge.
  • Clarify the requirements recording to the review and validation.

  • These measures apply to the regions in Guangdong included China’s service sub-contraction demonstration cities (excluding Shenzhen).

It shall come into force as of September 18, 2009.

The Notice Relating to the Adjustments for the Turnover Tax Policies as to Personal Housing Transfer
Caishui (2009) No.157

On December 12, 2009, State Taxation Administration promulgated The Notice of The Adjustments for the Turnover Tax Policies as to Personal Housing Transfer.
Core Contents:

  • As to personal transfer of housing not five years after acquisition, turnover tax of ordinary housing should be paid based on transfer difference, or paid based on transfer full amount as to non-ordinary housing.

  • As to personal transfer of housing more than five years after acquisition, ordinary housing is free from turnover tax, and turnover tax of non-ordinary housing should be paid based on transfer difference.

It shall come into force as of January 1, 2010.

The Notice Relating to the Link-up Issues Regarding to Reporting Items of Withholding for All Taxpayers and in Full Amount for Individual Income Tax Withholding Agent
Shendishuifa (2009) No.545

December 9, 2009, Shenzhen Local Taxation Bureau will fully practice individual income tax withholding reporting for all taxpayers and in full amount since January 1, 2010.
Core Contents:

  • Taxation authorities may reject withholding reporting collectively made by withholding agent.

  • Withholding agent who has access to online tax filing may use withholding and remittance system of State Taxation Administration or detailed reporting module of withholding and charging (individual income payments) of online tax filing system of Shenzhen Local Taxation Bureau to carry on withholding reporting for all taxpayers and in full amount.
  • Withholding agent who has no access to online tax filing should have withholding reporting dealt with in taxation service hall of local tax bureau (tax office) of jurisdiction.

Taxation Bureau News


Shenzhen National Tax Bureau Founds District Tax Inspection Substations, and Investigation and Management of Illegal Conducts in Relation to Taxation Will Be More Civilized and Normalized
Source: the website of Shenzhen National Tax Bureau (December 9, 2009)

December 10, 2009, State Taxation Administration On December 1, 2009, Li Xianzhu, the Director’s assistant of Shenzhen National Tax Bureau, and Liu Jiancheng, the Director of Tax Inspection Bureau of Shenzhen National Tax Bureau, attended the foundation ceremony of district tax inspection substations, evincing the significance of the foundation of these substations to the reform of the organizational structure in the national taxation system in Shenzhen. While strengthening the charging and management of taxation according to laws, Shenzhen National Tax Bureau has been considering tax inspection as one of emphases in work, regulating and normalizing taxation charging order on one hand, mending lost revenues by tax inspection on the other hand. They actively make working measure innovations regarding to tax inspection, and continually improve working quality and efficiency, endeavoring to construct a just and equitable environment for the jurisdictions.
Core Contents:

  • All national tax substations in Luohu, Futian, Nanshan, Baoan, Longgang and Shekou districts will establish tax inspection substations, all of which being directly under their respective control.

  • In combination with economic characteristics of the jurisdiction and through normalizing the enforcement of taxation charging and improving the civilized tax inspection, each substation will thoroughly investigate and penalize the illegal conducts of all categories about taxation paying by improving the charging and management of taxation through inspection.
  • Strengthening the supervising of day-to-day management of enterprises, and establishing the interaction system of quaternity of taxation analysis, tax payment assessment, tax source monitoring and tax inspection.

Strengthening the Collection and Management of Individual Income Tax and Enterprise Income Tax
Source: the website of State Taxation Administration (December 14, 2009)

A series of requirements have been put forward as to charging and management of individual income tax and enterprise income tax in the future in the working conference on the national income tax held recently.
Core Contents:

  • The identification for enterprises entitled to tax preferences will be strictly examined and verified.

  • Taxation authorities of every level are required to choose every year one to two trades with income tax burden rate obviously lower than national average level to carry out extensive inspection.

  • Front-line personnel are guided to carry out tax payment assessment, with assessed enterprises every year are not fewer than 20% of gross number of enterprises in each jurisdiction.

  • The individual income tax management is strengthened from seven aspects.

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