In addition, the new rule only applies to general industries and does not cover certain specific sectors and industries, for example, securities, fund management, trusts, banking, financial leases, insurance and real estate development among others. Are there any exchange control or currency regulations? Are there any restrictions on the remittance of profits abroad?
Foreign exchange used to be heavily regulated in China, particularly in relation to foreign investment. However, the Chinese government is gradually relaxing its foreign exchange restrictions to make the country more attractive and hospitable to foreign investors. China's State Administration of Foreign Exchange STATE has recently declared new regulations to simplify the regulatory procedures and improve administrative efficiencies in foreign exchange control.
Currently, for foreign investors to conduct any foreign exchange activities in connection with their investment in China, the activity will be subject to:.
Filing or registration with the bank delegated by SAFE. A substantive examination by the account-opening bank under the relevant law. In general, there are no restrictions on the remittance of profits abroad. Foreign investors can process the remittance through a local bank. The bank will verify the authenticity and consistency of the materials submitted by the foreign investor before conducting the remittance.
The remittance of onshore profits abroad is subject to certain withholding taxes in China. Imports Are there any restrictions on the importation of commercial goods? The customs authority and foreign trade authorities in China provide lists of goods that are prohibited from being imported into the Chinese market.
Chemical products. Animals and plants that contain dangerous bacteria, pests and other harmful organisms. Video materials that involve hatred, discrimination, instigation, superstition, and pornography. What import duties apply to commercial goods? Chinese customs duties are generally collected based on value and are levied at rates dependent on the type of goods and the country of origin and on certain occasions, collected on a quantity basis.
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The main types of customs duties are grouped into two categories:. Favoured tax. This tax usually only applies to countries that have a reciprocal tax treaty with China.
Normal tax. This tax applies to goods and services imported from countries that do not have a reciprocal tax treaty with China. There are two parts to import duties, custom duty and withholding VAT. The basic formula to work out import duty is that custom duty is equal to the after-tax price multiplied with the customs duty rate. For , the tariff rate of various customer goods was decreased, including food, medicines, daily chemical products, clothing, household equipment, and daily necessities.
In addition, the tariff rate for finished automobile and automotive spare parts has dropped. Are the safety regulations and standards applicable to commercial goods in your jurisdiction compatible with other standards that are recognised internationally? The Chinese Government has been paying increasing attention and making increasing effort to enhance its product quality and safety.
Multiple statutes have been declared or amended to reflect this, including:. The new Food Safety Law and its implementation rules, amended in Regulations stating product quality standards. Product quality law The law specifically provides that the regulations and implementation rules provided by the competent authorities must be in compliance with the international quality control standards for general use.
The state must implement a product quality authentication system by making reference to the internationally advanced product standards and technical requirements.
Foreign Firms, Investment, and Environmental Regulation in the People's Republic of China
Responsibilities for product quality supervision are as follows:. The State Council's product quality supervision department must be responsible for the nationwide supervision of product quality. The relevant departments of the State Council must be responsible for the supervision of product quality within the scope of their respective duties.
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Local product quality supervision departments at the provincial level must be responsible for product quality supervision within their administrative regions. Relevant departments of local people's governments at county level must be responsible for product quality supervision within the scope of their respective duties.
Consumer rights protection law of the People's Republic of China The law reflects China's intention to keep up with international standards in consumer rights protection. The law provides that consumers are entitled to protection of their personal safety, private information and property security when purchasing and using goods and after the provision of services.
Consumers have the right to expect that the goods and services provided by business operators satisfy the requirements for the protection of consumers' personal safety and property security. Consumers are entitled to obtain information about the goods they purchase or use and the services they receive. Consumers also have the right to require that business operators provide relevant information pertaining to the goods and services provided, the business operators must provide true and complete information upon such request.
Consumers whose personal safety or property is harmed as a result of the purchase or use of the goods or services rendered will be entitled to receive compensation under the law. Food safety standards are now regulated by the SAMR. The SAMR is expected to implement a consistent enforcement standard in the food industry.
Under the new Food Safety Law, for the first time, food wholesalers must set up an internal food sales record system to record certain detailed information, including the food's:. The records relating to the above must be kept for at least six months upon expiry of the product's shelf life if the item's shelf life is not specified, records must be kept at least two years. To comply with the traceability request, food additive merchants must:.
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Check a supplier's permits and quality certificates. The operators of online retail platforms that sell food products are also regulated by the Food Safety Law. Such operators must register the real contact information of the sellers who use their sales platforms and are responsible for verifying the seller's permits. To comply with these requirements, the online sales platform operators may be required to set up new computer systems, revise their registration procedures for their sellers, or recruit more staff to verify the information.
This may significantly increase the operational costs. Besides the new registration requirements, online platform operators that sell food products must:. Promptly report any illegal activities committed by their sellers on their online platform to the SAMR. Cease the online service rendered to such sellers accordingly.
Are there any similar or equivalent restrictions on providing services into another jurisdiction? On 14 February , the State Council issued the Opinions of the State Council on Accelerating the Development of Trade in Services [Guo Fa  No 8], which is intended to develop the services trade, increase job opportunities and adjust the Chinese economic structure. On 1 June , the State Council approved the plan to deepen innovation and development of service trade [Guo Han  No 79], enabling more than 15 cities and districts to deepen the innovation and development of service trade for two years, including Beijing, Tianjin, Shanghai and Hainan.
How is foreign investment into your jurisdiction typically structured? What forms of legal vehicle are attractive to foreign investors? There are three major forms of business structure in China:. Limited liability company LLC. For an FIE, these forms can be divided into a further three categories depending on ownership, capital contribution, and dividend requirements.
There are two types of joint venture under Chinese law:. The EJV Law has been implemented for more than 30 years, and is further supported by additional clarifying regulations, measures, decrees, and notices that deal with most aspects of the establishment and operation of EJVs.
To qualify as an EJV, there must be at least one foreign investor and at least one Chinese investor. CJV investors can negotiate their terms of co-operation, which means they do not have to share returns and losses proportionate to their equity investments; and. However, in recent years the CJV gradually appears to be a less popular option for foreign investment. A WFOE is the most popular form of foreign investment in China, as foreign investors increasingly believe that China's economic and legal development have made it unnecessary to rely on guidance from a local partner.
The flexibility afforded to WFOEs has been viewed as part of the Chinese Government's efforts to minimise the disparity in the treatment of domestic-owned companies and FIEs. However, in recent years, FIPs have become more popular among foreign investors. In addition, the partners can create their own agreement to govern the distribution of profits or losses and are not strictly tied up with the investment percentage.
However, forming and operating an FIP can involve communication and discussion with relevant governmental authorities because some relevant governmental authorities in certain areas of China have limited experience in administering FIPs. What are the circumstances under which a business becomes liable to pay tax in your jurisdiction? China has a unifying taxation regime for FIEs and domestic companies. Enterprises and other organisations that derive income from or accrue income in China are liable to pay corporate income tax under the applicable Chinese tax laws.
A business incorporated outside of China but with its actual management functions conducted in China will be treated as a resident enterprise lawfully incorporated in China. A non-resident enterprise will pay corporate income tax for income derived from or accruing in China by its permanent establishment in China, and for income derived from or accruing outside of China which has a de facto relationship with the permanent establishment in China in accordance with the EIT Law.
What are the main business tax rates? In addition to corporate income tax, business taxes in China mainly include the following:. Value added tax VAT. According to the Provisional Regulations on VAT revised in VAT Regulation , organisations and individuals engaging in the sale of goods or processing, repair and assembly services, sale of services, intangible assets, real estate and importation of goods in China must pay VAT. Stamp duty.
All enterprises and individuals who execute or receive "specified documentation" including ten types of contracts and a few specified documents are subject to stamp duty. The stamp duty rates range from 0. A flat amount of RMB5 applies to certification evidencing business licences and patents, trade marks, or similar rights.