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China Updates – 2 November 2022

  • The Hong Kong Monetary Authority has launched a new platform that enables banks to gain a more accurate picture of businesses’ financial health, thereby boosting the chances of SMEs in securing loans.
  • The Shanghai Municipal People’s Government has introduced a range of measures to boost inbound reinvestment by foreign investors.
Hong Kong Monetary Authority launches platform to help SMEs secure loans by sharing data

The Hong Kong Monetary Authority (“HKMA”) has launched a new platform that enables banks to gain a more accurate picture of businesses’ financial health, thereby boosting the chances of SMEs in securing loans. Traditionally, SMEs have found it difficult to obtain loans due to the lack of collateral.

As one of the key initiatives under the HKMA’s “Fintech 2025” strategy, the Commercial Data Interchange (“CDI”) that was officially launched on 24 October 2022 allows the 23 participating banks to retrieve enterprises’ commercial data to determine their operating condition and, therefore, their creditworthiness. 10 data providers have joined – six of which have substantial data on SMEs.

The CDI has registered over HK$1.6 billion in approved SME loans during the pilot launch.

With the official launch of the CDI, it is expected that financial institutions will increasingly embrace digitalisation and innovation in respect of different financial processes, including KYC, credit assessment, loan approval and risk management.

Mr Howard Lee, Deputy Chief Executive of the HKMA, remarked: “With tremendous support from banks and data providers across various sectors, we are delighted to see CDI evolving from an idea to a pilot, and eventually a production-ready infrastructure throughout this two-year journey. Today’s official launch is a milestone signifying a new era of data sharing. We believe CDI will become a key enabler for multilateral data sharing among banks and data providers, catalysing financial innovations.”

 

Preferential income tax treatment for Hong Kong and Macao residents working in Nan Sha of Guangdong Province

The State Taxation Administration Bureau of Guangdong Province has issued a notice bringing into effect a circular that grants preferential individual income tax treatment to Hong Kong and Macao residents working in Nan Sha of Guangdong Province. The Circular is effective from 1 January 2022 to 31 December 2026.

For Hong Kong residents working in Nan Sha, the portion of individual income tax exceeding that in Hong Kong will be exempted. For Macao residents working in Nan Sha, the portion of individual income tax exceeding that in Macao will be exempted.

Qualified income for exemption includes wages and salaries, business income and recruitment subsidies as well as income from personal services, such as royalties.

 

Shanghai promotes inbound reinvestment by foreign investors

The Shanghai Municipal People’s Government promulgated the Several Measures of Shanghai Municipality on Boosting the Development of High-end Manufacturing on 10 October 2022, the aims of which are the following:

– To stabilise foreign trade and investment in advanced manufacturing;
– To promote the publicity and implementation of preferential tax policies to boost inbound reinvestment by foreign investors;
– To encourage cross-governmental cooperation on municipal and district level in the support of manufacturing projects that have been identified as major foreign investment projects;
– To support policy banks and commercial banks in the provision of financing services for enterprises engaged in advanced manufacturing, strategic emerging industries, new digital infrastructure, and other related areas;
– To strengthen the linkage between the policies of special industrial parks and free trade zones;
– To expand the scope of the “whitelist” of imported R&D items for R&D institutions.

 

 

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