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 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. 

 

 

IMMIGRATION 

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-19suspected 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. 

 

FINANCE

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” iabout to bimplemented. 

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. 

 

TAXATION 

 

Shenzhen issues guidelines on applying individual income tax subsidies in the Greater Bay Area. 

 

On 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