The recent outbreak of COVID-19 has severely disrupted our daily lives and business operations. As of 19 July 2020, the total confirmed cases in Hong Kong has reached over 1,800. To minimize transmission of imported cases, a mandatory 14-day quarantine for persons entering Hong Kong was implemented on 8 February 2020. Under the travel restrictions, multinational companies requiring routine travelling have been forced to suspend business trips, changing their work patterns.
Recently, the Government of Hong Kong SAR announced that Hong Kong enterprises with manufacturing operations in the Mainland can apply for exemption from the compulsory quarantine arrangement. Under the amended section 4(1)(b) of Cap. 599C, the Chief Secretary for Administration has exempted the following category of persons from the compulsory quarantine arrangement with effect from 4 May 2020 –
(a) either the owner of a Hong Kong enterprise with a valid business registration certificate issued under the Business Registration Ordinance (Cap. 310) and with manufacturing operations in the Mainland, and up to one personnel employed and so authorized by the enterprise; or
(b) up to two personnel employed and so authorized by such an enterprise as described in (a).
Upon successful application, the exempted person may travel to and stay in the city where the Mainland factory of the enterprise’s manufacturing operations is located, for supporting the operation and business of the factory. When returning to Hong Kong, the person is exempted from the 14-day quarantine, but will be subjected to medical surveillance arranged by the Department of Health during his/her stay in Hong Kong, and will be required to wear masks and check body temperature daily, as well as to report to the Department of Health on any discomfort.
The above arrangement would allow flexibility for Hong Kong companies to send personnel to designated Chinese cities and support their manufacturing operations. The personnel are not subject to mandatory quarantine in Hong Kong when they return from their business trip. However, they may still be subject to local quarantine requirements in mainland China when they travel outbound from Hong Kong.
What CW can do for you:
CW can assist our clients with the application of the above-mentioned exemption including
- analyzing the application criteria, and
- preparing and submitting the application.
Written by Toby Wong, China Consultancy Team, CW CPA
FOREIGN DIRECT INVESTMENTS
The 2020 edition of the Negative List of Foreign Investment Access released.
On 23 June 2020, the National Development and Reform Commission and the Ministry of Commerce respectively issued the Special Administrative Measures for Foreign Investment Access (Negative List) (2020 Edition) and the Special Management Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2020 Edition), effective as of 23 July 2020. The national negative list of foreign investment access has been reduced from 40 to 33, and the negative list of foreign investment access in pilot free trade zones has been reduced from 37 to 30. The main changes include the following:
- In the pharmaceutical industry, the prohibition on foreign investment in traditional Chinese medicines prepared in ready-to-use forms will be removed.
- In the education sector, wholly foreign-owned vocational education institutions with schooling are allowed to be established.
- In the financial sector, the restrictions on the ratio of foreign shares in securities companies, securities investment fund management companies, futures companies and life insurance companies will be removed.
- In the infrastructure sector, the provision that the construction and operation of urban water supply and drainage networks with a population of more than 500,000 must be controlled by Chinese investors will be removed.
- In the manufacturing sector, the restrictions on foreign shares in commercial vehicle manufacturing will be removed, and the provisions prohibiting foreign investment in radioactive mineral smelting, processing and nuclear fuel production will be removed.
- In the agricultural sector, the proportion of Chinese shares shall not be less than 34% on breeding of new wheat varieties and seed production.
China to tighten regulations on cosmetics business.
On 29 June 2020, The Regulations on Supervision and Administration of Cosmetics (hereinafter referred to as the “New Regulations”) was officially promulgated and will take effect on 1 January 2021.
Compared to the existing regulations, the new regulations have stepped up to tighten the administration and supervision of market players in the cosmetics industry. Highlights include:
- The new regulations clearly stipulate the types of new raw materials that need to be put on record and registered, as well as the specific procedures, the materials submitted, and the review period.
- Reclassify the categories of cosmetics.
- It further clarifies the responsibilities and obligations of relevant personnel, and their legal liability of noncompliance.
- The new regulations put forward requirements for the actual effect of efficacy components and raise higher expectations on cosmetics producer’s management and research and development.
- The new regulation has increase penalties for violations and committed drive serious offenders out of the market.
Personnel entering Guangdong Province at Guangdong Macao port will no longer be subject to centralized isolation from 15 July 2020.
Since 6:00 a.m. on July 15, personnel entering Guangdong Province from Guangdong and Macao ports will no longer be subject to centralized isolation for 14 days of medical observation, except for those diagnosed with COVID-19, suspected to be infected, having had close contacts with patients, showing signs of fever or respiratory symptoms, or having been visited by overseas personnel within 14 days prior to arrival in Guangdong province. Pre-entry preparations include: (1) Completion of nucleic acid testing. (2) Application for “Macao Health Code” and “YueKang Code”.
Personnel who enter the Guangdong province through Macao can only conduct activities in nine cities, namely Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, Zhaoqing.
For Macao residents who work or live in Guangdong province and mainland China residents who come back to Guangdong province after visiting Macao, their movements are limited to Guangdong province.
The People’s Bank of China to Launch Two Year Trials for Large-sum Cash Management.
The People’s Bank of China recently issued the “Notice of the People’s Bank of China on the launch of Large-amount Cash Management pilot project”, in which it has decided to carry out the pilot project in Hebei Province, Zhejiang Province, and Shenzhen from July 2020.
In all the pilot areas, cash transactions of 500,000 yuan or more in business accounts will be monitored and regulated.
For personal accounts, Hebei, Zhejiang and Shenzhen have set regulation thresholds at 100,000 yuan, 300,000 yuan and 200,000 yuan, respectively. Residents the pilot areas will need to provide information about the source of deposits or the purpose of withdrawals for transactions over the threshold.
Financial institutions should make sure personal deposits or withdrawals exceeding the threshold amount are traceable and associated with serial numbers of physical cash.
Greater Bay Area – “Cross-border Financial Management Link” is about to be implemented.
To support the development of Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”) and facilitate cooperation between mainland China and Hong Kong as well as Macao, on 29 June, the People’s Bank of China, the Hong Kong Monetary Authority, and the Macao Monetary Authority decided to launch a “Cross-border Financial Management Link” program in the GBA .
“Cross-border Financial Management Link” facilitates cross-border investments of individual residents of GBA in financial products sold by the Banks in GBA. Mainland residents in GBA may open special investment accounts with banks in Hong Kong and Macao to purchase eligible investment products sold by these banks. Residents of Hong Kong and Macao can open special investment accounts with mainland banks in the mainland GBA cities to purchase eligible wealth management products sold by mainland banks.
Shenzhen issues guidelines on applying individual income tax subsidies in the Greater Bay Area.
On 2 July 2020, Shenzhen issued the Notice on implementing the Preferential Policies of Individual Income Tax in the Greater Bay Area of Guangdong province, Hong Kong and Macao, and the Guidelines for the Application for Subsidies of Individual Income Tax for 2019 for high-end talents and talents in short supply.
Eligible applicants will be granted subsidies according to the difference of individual income tax burden between the mainland and Hong Kong. And the subsidies will be exempted from individual income tax.
China announced new tax policies to support film businesses.
In order to support the development of film and other industries, the relevant tax policies are announced as follows:
- From 1 January 2020 to 31 December 2020, the income obtained by taxpayers in providing film projection services shall be exempted from VAT.
- The longest period for loss carried forward of film industry enterprises in 2020 will be extended from 5 years to 8 years.
- From 1 January 2020 to 31 December 2020, the construction fee of cultural undertakings will be exempted.
Written by China Consultancy Team, CW CPA
Six months after the human-to-human transmission of the COVID-19 virus was confirmed, economic recovery has begun in countries in the Asia Pacific region. As of today, most of the economies in this region have emerged from confinement and commercial activities have been gradually resumed. Thanks to their previous experience with SARS, these countries appear to have managed to control health crisis in a short period of time. Just a few weeks ago, the first online edition of the Canton Fair was held, meanwhile several countries are exploring the possibility of opening “travel bubbles” to allow the traffic of businessmen and tourists.
In the case of Mexico and other countries of the American continent, the peaks of the epidemic are barely being reached, so it will take at least another three months to significantly reduce the number of infections. Therefore, it is very likely that for the rest of 2020, travel restrictions will continue to be
imposed, and it is practically impossible to make trips abroad to participate in specialized events and business meetings.
Despite the fact that technology has played a key role during confinement, many aspects of business cannot be carried out through a computer. Facing this new reality, commercial representatives have become an important ally in an international business strategy.
WHAT DO COMMERCIAL REPRESENTATIVES DO?
As the name indicates, a commercial representative represents a company, public entity or an individual who hires him/her, to carry out tasks of marketing and promotion of products or services. One of the major requirements for being a commercial representative is that in addition to having interest in the country that the company locates, he/her must have necessary skills for efficient communication at the local level, that is, a broad knowledge of the language and business culture.
Job duties carried out by a commercial representative include direct contact with the company’s clients or suppliers, contact with potential clients, representation in negotiations, presentations at specialized events, participation in trade fairs, and identification of business opportunities.
WHAT ARE THE ADVANTAGES OF HAVING A COMMERCIAL REPRESENTATIVE?
In addition to the significant reduction in travelling cost, a commercial representative can carry out sales activities, promotion of the brand, identification of potential clients, participation in specialized fairs, informal and formal meetings, and mapping of trends in our sector. This allows the
company to save time and resources, which should otherwise be taken from other areas of the company.
Cities like Hong Kong offer an ideal business environment to establish a Commercial Representation. On one hand, it is possible to establish a company without having a physical presence in the city, in addition to the fact that the tax system allows us to carry out purchase and sale operations through our company with a minimum of taxes. On the other hand, Hong Kong has a privileged location in Asia, from here you can travel to the entire continent, and is the center of a large number of international corporate and specialized trade fairs, allowing a significant reach of clients.
WHAT ARE THE MAIN ASPECTS TO CONSIDER WHEN RECRUITING A COMMERCIAL REPRESENTATIVE?
In addition to his/her knowledge and experience at a local level, it is important that the Representative knows the services and products in detail, so that he can offer the best solution to our clients.
On the other hand, it is very important to sign a collaboration agreement specifying the needs of our business, the economic terms of representation, confidentiality and the intellectual property clause, to ensure that our project and clients are in good hands.
As of today, no country has an exact date of returning to “normalcy”. In fact, various analyses indicate that the world will continue to face the waves of COVID-19 during the rest of 2020 and 2021. Now more than ever, it is necessary to rethink our internationalization strategies, identifying actions that represent lower costs and better results. Therefore, a commercial representative / commercial representation can offer a short- and medium-term solution for our internationalization projects.
IF YOU WOULD LIKE TO KNOW MORE ABOUT COMMERCIAL REPRESENTATION SERVICES IN ASIA, DO NOT HESITATE TO CONTACT US.
Written by Susana Muñoz Enríquez, Managing Director in GBA LatAm Trade and Investment Advisors
Organisations never stand still. Whether they are downsizing or expanding into new territories, change is now constant. In particular, in these unprecedented times like Covid-19, many of our clients are exploring solutions to enhance organisational performance and productivity, and to strengthen team capabilities. Therefore, CW CPA is partnering with Hewlett Rand to extend HR and Training consultancy support to clients through this period of unparalleled change.
Beyond the rhetoric for this critical period, there will be more actions, more engagements, more measures coming up to move our clients’ business forward. We all soldier on.
Hewlett Rand provides tailored support for HR, leadership and business development training to support organisational transformation. Including facilitation for strategic planning, management and sales training, team collaboration and supporting mental health and wellbeing, as well HR advice. In the current climate, a great deal of their client work has switched to virtual online training and consultancy via Zoom, which is proving popular with businesses that in geographically dispersed teams and remote home working.
Richard Lowe, Director of Training and Digital Learning Solutions said, ‘We’re absolutely delighted to partnering with CW’s China Consultancy Team who have a robust HR system and payroll proposition that we feel we can complement’.
Hewlett Rand can guide you through the process of change and transformation and help you to create a positive and productive working environment that brings out the very best in your people and your organisation.
Angela Tang, HR & Training Partner said, ‘As a commercially focused consultancy team, we’re keen to ensure that our HR advice and Training solutions add value to support businesses with profitable growth and to adapt to an ever-changing environment’
So, wherever you want to take your organisation, Hewlett Rand will help your leaders and teams to get there faster. Please take the time to review the blogs of Richard Lowe and Angela Tang. CW can help you connect with them if you are interested in transforming your workplace and boost the capabilities of your workforce.
Written by Richard Lowe, Director of Training and Digital Learning Solutions, Hewlett Rand
According to the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area, one of the region’s strategic positioning is to grow into an international scientific and technological innovation center with global influence. As talent is the basic driving force for science and technology development and innovation, the development of the Guangdong-Hong Kong-Macao Greater Bay Area will rely on innovative system and mechanism to stimulate the innovation vitality of talents.
On 14 March 2019, China’s Ministry of Finance and State Administration of Taxation jointly issued a Notice on Individual Income Tax Incentives for Guangdong-Hong Kong-Macau Greater Bay Area. Guangdong Province and Shenzhen Municipality shall grant subsidy overseas (including Hong Kong, Macau and Taiwan, same hereinafter) high-end talents and talents in short supply working in the Greater Bay Area, and such subsidy, equivalent to the individual income tax difference between Mainland and Hong Kong, will be exempted from individual income tax.
Following the above policy, Shenzhen Municipality issued two documents detailing the implementation of the IIT subsidy application for high-end talents and talents in short supply working in Shenzhen:
- Notice on the Implementation of Preferential Individual Income Tax Policies for the Guangdong-Hong Kong-Macau Greater Bay Area, effective since 27 March 2020.
- Notice on Promulgation of the Guidelines for the Application for Individual Income Tax Subsidies for Overseas High-end Talent and Talent in Short Supply in Shenzhen for Tax Year 2019, effective since 10 July 2020.
Based on the instructions given by the government of Guangdong Province, the preferential policy refines the detailed conditions and criteria for applicants according to the actual situation in Shenzhen. The promulgation of the above two documents marks the official landing of the Greater Bay Area (GBA) Individual Income Tax rebate in Shenzhen, which will effectively help Shenzhen acquire more talents.
To be eligible for the IIT subsidy, an applicant should first meet the basic requirements in terms of identity and his/her employment condition. Under the guidelines provided by the Shenzhen Government, an applicant should fall in one of the following categories:
- A permanent resident of Hong Kong or Macao;
- A mainland resident having settled down in Hong Kong or Macao (having deregistered his Mainland household registration)
- A Hong Kong resident under admission schemes for talent, professionals and entrepreneurs;
- A resident in Taiwan region;
- Foreign nationals;
- An overseas returnee who has obtained the right of long-term residence in a foreign country;
- Overseas Chinese.
In addition, the applicant should prove that he/she has entered into an employment contract with an employer in Shenzhen or has signed a dispatch agreement with an overseas employer and an entity in Shenzhen. For certain qualified applicants who provide independent personal services in Shenzhen, they must provide their corresponding service contract with a taxpayer in Shenzhen.
Besides the above basic requirements, an applicant should meet any of the following conditions:
- Being selected for national, provincial or municipal major talent projects;
- Being an overseas high-level talent recognized by the State, the Province or the Municipality.
- Obtaining a Guangdong Superior Talent Card of Guangdong Province;
- Talent with permanent residency in China, work permit for foreigners working in China (Type A and Type B) or confirmation letter for foreign high-end talent;
- Any member of a scientific research team or manager at or above the middle level of a national, provincial, or municipal major innovation platform;
- Any member of a scientific research and technology team or manager above the middle level in an institution of higher learning, scientific research institute, hospital or any other relevant institution, or any member of a team undertaking a major vertical project under research at or above the municipal level, or any leader for a key discipline or key specialty at or above the municipal level.
- Managers above the middle level, scientific research team members, technical and skill backbones and excellent young talent of headquarters enterprises, top global 500 enterprises and their branches and high-tech enterprises, large backbone enterprises, listed enterprises and enterprises included in the pool for cultivation and innovation-oriented high growth sci-tech SMEs;
- Managers above the middle level, members of scientific research team, technical and technical backbones and excellent young talent who start business or are employed in key industries and fields to be developed in Shenzhen, and have not passed or failed to pass within the time limit the acceptance inspection of a project supported by the special fund for the development of a strategic emerging industry in Shenzhen that they are responsible for or participate in within the latest three years.
Key Points on the Guidelines for Application in Shenzhen
- It should be noted that the subsidy is only granted to applicants paying taxes exceeding 15% of the taxable income. Foreign nationals are, in addition, subject to a minimum annual taxable income threshold of RMB500,000.
- Once the eligible applicants are identified, proper travel schedules should be maintained by the applicants to ensure that they stay in Shenzhen for at least 90 days during a tax year.
- Successful applicants cannot enjoy other IIT-related talent preferential policies in Shenzhen. Meanwhile, the details of IIT policy in GBA may vary in different cities. The criteria, requirements, calculation methods and procedures in Shenzhen may not be applicable to other cities in the GBA.
- The applicant’s credit information may be inquired through channels such as Shenzhen Credit Platform.
Calculation of IIT Subsidy
The basic formula is that the IIT subsidy should equal to the tax paid according to the PRC IIT Law deducted by the estimated tax calculated at 15% of the taxable income, so that the taxpayer would have an effective IIT rate of 15%:
IIT Subsidy=Tax Paid – (15% x taxable income)
Taxable Income refers to the following income categories according to the Individual Income Tax Law of the People’s Republic of China:
- Income from wages and salaries;
- Income from remuneration for labor services.,
- Income from authorial remuneration;
- Income from royalties;
- Business income;
- Subsidized income from the talent projects.
Estimated tax amount means the tax amount payable for the taxpayer’s individual income derived in Shenzhen within the tax year computed pursuant to the tax laws of Hong Kong. It will be calculated according to the standard tax rate method, which is, estimated tax amount = taxable income of the taxpayer in Shenzhen x 15%.
What CW Can Offer
Our multilingual professionals can help to facilitate communications throughout the application process and enable us to provide tailored services to our clients. We offer:
- Guidance throughout the whole application process;
- Professional consultation services to help you resolve your concerns and difficulties;
- Collect, review and file documents and materials according to the specific policy requirements;
- Organize training sessions for each client before submitting their online applications.
If any assistance is required, we are here to listen and help. Please do not hesitate to get in touch if you have any questions.
Written by China Consultancy Team, CW CPA
Today, organizations can now select from several international and local banks to open a corporate bank account in Hong Kong. Many products and services have been tailored to address these issues by every significant bank in Hong Kong, both local and international. You need to know those things required by your bank before opening an account so that whatever the bank offers can go with your needs.
Have you had a go at opening a corporate bank account in Hong Kong and had been dismissed with no clarification from the bank? The global banking system has been compelled to rebuild its activity and strategies. Compliance is characterized as the capacity to act by following some guidelines. By not complying with these guidelines, the reputation of the bank is affected.
You must come prepared with the following in mind, a non-exhaustive list, and be ready to wait for some days to get approval if you want to open a bank account without having issues. And be prepared for the banks to come back with more questions and clarifications, as a direct result of anti-money laundering and counter-financing terrorism (AML/CFT) during the process of opening a new bank account for the client.
Below, we list the primary reasons why people find it hard to open bank accounts in Hong Kong:
Banks work under a lot of standards and rules that are commanded by regulators. What is more, banks ought to be severely penalized under various sanctions if they do not conform to these rules. Subsequently, it has made them excessively protective of their financial services, which causes that the procedures involved in opening a new bank account gets more complicated and difficult and takes more time.
Banks are commercial organizations motivated by financial benefit. They hope to guarantee that the organizations are beneficial before contributing their time and assets. A business evaluation will be applied based on the interests that can be earned from the organizations. Along these lines, an organization’s profile is an important criterion that can influence the bank’s points of view.
By and large, banks will demand that each organizational head come to Hong Kong or meet them face to face for the procedures involved in opening a bank account. It makes things even more difficult, especially with the outbreak of COVID-19. Then again, the application surveying can be taken half a month or every month to process the stringent assessment. What’s more, the bank evaluation plan will differ by organizations, making the selection of candidates obscure. The whole process can move faster if the banks get advice from a service provider that is well-vast in this area and prepare adequately before an interview.
Most of the world’s important banks have branches in Hong Kong. Before you get involved in the opening of a corporate bank account, it is critical to consider these factors:
- The reputation of the bank
- Services and facilities offered by the bank
- Future support services like loans or trade financing
- Minimum requirement deposit
- Internet banking facilities offered and
- Monthly charges (if any)
Despite the difficulties, most international companies appreciate the advantages of establishing a company in Hong Kong and the using of Hong Kong’s banking system to facilitate their international transactions. These advantages include:
- No restriction on foreign exchange remittance or free transfer of funds;
- Convenience in settlement of international trades;
- No interest in tax with higher revenues of deposits;
- Free conversion of currencies;
- Convenience in daily account operation and online bank transactions; and
- The ease involved in getting trade financing from international banks.
As one of the world’s largest financial centers, Hong Kong is the perfect spot for making ventures and opening bank account for investors. Be that as it may, banks have various prerequisites on the procedures and information needed to open a bank account. The organization’s executive may need to invest extra energy in making inquiries to the bank for this, as he may neglect to produce the necessary information, which might lead to a lot of wasted time.
CW has been working closely with a couple of international banks trying to provide solutions to foreign companies with imminent needs to operate in Hong Kong. In the past few months, our Company Secretarial Team has helped several clients open the corporate bank account without the directors’ presence. We can help you navigate through the process of applying for a corporate bank account with our expertise in dealing with the increasingly stringent customer due diligence requirements mandated by the banks.
If you are interested in opening a corporate bank account in Hong Kong, please download CW service brochure (https://www.cwhkcpa.com/wp-content/uploads/2020/05/CW-Service-HK-Company-Corporate-Bank-Account-Opening.pdf) and contact Ms. May Ly (email@example.com).
Please click below link to access June 2020 South China Business Journal of American Chamber of Commerce in South China:
Written by Company Secretary Team, CW CPA
Are you considering an IT upgrade in Hong Kong? Is your company adopting the idea of remote working or service?
Under the Anti-Epidemic Fund, the Innovation and Technology Commission has launched the Distance Business (D-Biz) Programme (“the Programme”) to provide funding support through fast-track processing for enterprises to adopt IT solutions for developing distance business.
For each IT solution and the relevant training expenses for the employees, the funding ceiling is HK$100,000 (with funding for the relevant training expenses capped at 10% of the IT solution cost). Each enterprise may receive total funding of up to HK$300,000 to undertake a project to be completed within 6 months.
The Programme covers 12 categories of IT solutions for distance business:
- Online business
- Online order taking and delivery, and smart self-service systems
- Online customer services and engagement
- Digital customer experience enhancement
- Digital payment / mobile point of sale
- Online / cloud-based financial management systems
- Online / cloud-based human resources management systems
- Remote document management, cloud storage and remote access services
- Virtual meeting and conferencing tools
- Virtual team management and communications
- Cybersecurity solutions
- Other online / custom-built / cloud-based business support systems
The Programme provides an IT Service Providers Reference List (“Reference List”) to offer relevant market information for enterprises’ reference. Service Providers are welcome to apply and enroll to the Reference List. Enterprises interested in upgrading their IT infrastructure should apply for the IT funding by referring to the Reference List.
To increase your success rate, here are some tips we would like to share with you:
- Enterprises are required to undertake that the relevant project (with maximum 3 IT solutions) would be completed within six months;
- Expected project benefits (maximum 800 words) need to be explained;
- Every procurement in relation to the project would require two fee quotes from IT service providers;
- An external auditor should be engaged for any project amounting to HK$30,000 or above; 2 fee quotes are needed (maximum amount to be claimed: HK$3,000);
- Probity and Non-Collusive Quotation Certificate need to be signed by each vendor and auditor providing fee quotes; and
- Only ONLINE application is accepted (that might take around 2 hours because it would take time to upload documents of different sizes and formats and probably of busy traffic).
Whilst the Government has started accepting applications on 18 May 2020, your swift action is important given that the total amount of funding is limited at HK$500 million.
In application for the Distance Business (D-Biz) Programme, CW can provide the following services:
- For IT companies
With the application for enrolment to the IT Service Providers Reference List including
- Gathering the supporting documents, and
- Preparing and submitting the application.
2. For other businesses interested in adopting IT solutions
With the D-Biz funding application including
- Reviewing the supporting documents, and
- Project audit, if required.
Written by Toby Wong, China Consultancy Team, CW CPA
FOREIGN DIRECT INVESTMENTS
Stabilize the Foreign Trade and Foreign Investment Mentioned in PRC Government Work Report 2020
A closing meeting of the third session of the 13th National People’s Congress was held in Beijing on 28 May 2020 and the resolution on the report on the work of the Government was adopted and approved. The key messages for foreign investors are the following:
- Promote a higher level of opening-up of the Chinese market to foreign investments
- Support further liberalization and facilitation of international trade
- Provide guidance of healthy development of Chinese outbound investments
Full text of the Report can be downloaded from here: Download Report
China’s Civil Code coming into force on 1 January 2021
China’s third session of the 13th National People’s Congress voted to adopt the Civil Code of the People’s Republic of China, which will come into force on 1 January 2021. The current Marriage Law, Inheritance Law, General Principles of Civil Law, Adoption Law, Guarantee law, Contract law, Property law, and Tort Liability Law shall be repealed simultaneously. It is a systematic integration and compilation of decentralized civil legislation since 1949. One of the key points of the amendment of the Civil Code is to strengthen the protection of personal information and privacy.
The State Council Issues the Overall Plan for the Construction of Hainan Free Trade Port
On 1 June 2020, the Overall Plan for the Construction of Hainan Free Trade Port, formulated by the State Council, was officially released. The key policies include but not limited to:
- Maximum personal income tax of 15 percent high-end talents;
- Corporate income tax of 15 percent on encouraged industrial enterprises;
- Exempt from import duties, import value-added tax and consumption tax on imported goods purchase by island residents;
- Conduct the negative list of cross-border trade in services for Hainan Free Trade Port;
- Conduct a negative list management system on the issuance of work permit for foreign employees.
TRADE, CUSTOMS AND INDUSTRIES
Further compliance management guidelines for online retail platforms
The China Council for the Promotion of International Trade has completed the drafting of The Compliance Management Guide for Online Retail Platforms. The draft was published on 5 June 2020 for consultation until 26 June 2020.
The Compliance Management Guide for Online Retail Platforms includes detailed rules on the online retail operators in adopting compliance grading, assessment, management & supervision of online retailers. It is suitable for online retail platform operators in evaluating and managing the compliance of online retailers applying for joining the platform.
EMPLOYMENT & LABOR
Guangdong Province’s guidelines on applying for China visa under existing travel restriction
On 28 May 2020, the Foreign Affairs Office of the People’s Government of Guangdong Province issued an announcement explaining the basic procedures of applying for an invitation letter for the purpose of China visa under existing travel restriction imposed by the Ministry of Foreign Affairs of PRC and National Immigration Administration since 26 March 2020.
Foreign nationals engaging in necessary economic, trade, scientific or technological activities may apply for an invitation letter with the local Foreign Affairs Office, which then can be used to apply for a visa to enter China.
Similar procedures apply to other provinces. Foreign nationals who wish to travel to China should contact the local Foreign Affairs Office.
Shanghai – employer subsidy scheme for training fees
All types of enterprises in Shanghai affected by the pandemic which organized online training for employees and dispatched workers during the shutdown period can receive 95% subsidy based on the actual amount spent on the training course. Platform enterprises (e-commerce enterprises) and new business enterprises are eligible to apply. (Responsible units: Shanghai Municipal Human Resources and Social Security Bureau and Shanghai Municipal Finance Bureau)
FINANCE & TAXATION
The Application Period for Preferential Policy of Personal Income Tax of GBA is from 1 July to 15 August 2020
In accordance with Interim Measures of Guangzhou for Administration of Financial Subsidies under Preferential Individual Income Tax (IIT) Policies in Guangdong-Hong Kong-Macao Greater Bay Area (GBA), overseas high-end talents and talents in short supply who work within the administrative areas of Guangzhou shall be given financial subsidies if their IIT paid in Guangzhou exceeding the tax amount computed at 15% of their taxable income. The application period of this year for preferential policy in Guangzhou city begins from 1 July to 15 August.
Announcement of the State Taxation Administration on Matters concerning the Deferred Payment of Income Tax in 2020 by Small Low-profit Enterprises
From 1 May 2020 to 31 December 2020, small low-profit enterprises may defer the payment of corporate income tax for the current period after completing the filing of tax returns with prepayment according to the provisions in the remaining filing period in 2020, and the payment of all income tax amount may be deferred to the first period for filing tax returns in 2021.
Small low-profit enterprises refer to enterprises engaging in non-restricted and non-prohibited businesses, which satisfy three criteria simultaneously, namely, annual taxable income amount does not exceed RMB3 million, staff headcount does not exceed 300 and total assets do not exceed RMB50 million.
Written by China Consultancy Team, CW CPA
Among 108 global cities, Shenzhen was ranked 11th in the Global Financial Centers Index (GFCI) 27 Report published by the Z/Yen from the United Kingdom and the China Development Institute from Shenzhen.
The index evaluates thoroughly and ranks the world’s major financial centers in terms of business environment, human resources, infrastructure, development level and reputation.
As mainland China’s first-tier cities, Beijing, Shanghai, Shenzhen and Guangzhou have entered the top 20 in the world. Shenzhen came first among mainland Chinese cities in the Greater Bay Area and has played its special role. Shenzhen is expected to be a marketplace for innovation capital, with its advantages concentrated in the capital market, innovation investment and the service provision for the “Belt and Road”.
In additional, the GFCI questionnaire revealed that, Shenzhen was the 6th most mentioned city in terms of prospects over the next two to three years and was considered the 6th most competitive location for fostering a FinTech industry.
Written by Toby Wong, China Consultancy Team, CW CPA
In an unprecedented fashion, Shenzhen is currently striving to become a world-class new-type smart-city benchmark by increasing digitalization in social governance. In 2019, Shenzhen was ranked first among Chinese cities in terms of smart city development, according to the Information Research Center of the Chinese Academy of Social Sciences. It superseded the others, such as Hangzhou, Shanghai, Beijing and Guangzhou, with flying colours, having earned a comprehensive score of 77.4 points and been awarded a prize for taking the lead in smart city construction. How did Shenzhen achieve such a result?
The Shenzhen government has invested substantial resources to upgrade its smart city and digital government construction. In order to achieve this goal, Shenzhen is learning from other world-class cities to form a sound data management and security system, rapidly expanding the use of applications of big data, artificial intelligence, 5G and blockchain, and opening a new space in the digital world by promoting the integration of technologies, data and businesses across regions, systems, departments and industries.
With great determination and ambition, Shenzhen has been ready to face the challenges and opportunities of the digital era. Shenzhen plans to develop a new type of smart city operation and management system that is comprised of one city center, 11 district centers and numerous industrial centers. The Shenzhen Municipal People’s Government has also implemented a one-stop system that automatically reviews the applicants’ information of service items and approves their applications.
Regarding the livelihood, the information on personal documents, such as identity documents, driver’s licenses, social insurance, library and bank cards, will be integrated into one single account, through which residents can enjoy different types of services via fingerprint, facial recognition, identity card number or phone number. All such services will be consolidated on an official app.
Written by Toby Wong, China Consultancy Team, CW CPA