China Business News

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In a circular, jointly released by the Ministry of Finance (MoF), the State Administration of Taxation (SAT) and three other authorities, provides for better company income tax (CIT) policies offering further relaxation in the tax incentives to the qualified advanced technology services companies. The circular is effective from Jan 01, 2014 to Dec 31, 2018.

Key points:

Hong Kong: Taxation of director’s fees

The taxation of director’s fee for a company incorporated offshore is a delicate issue, and it is vital to know under what jurisdiction directors are subject to tax.

In a recent published case (Case No. D21/13), the Hong Kong Board of Review had to decide whether fees earned by a director of a company incorporated offshore but listed in Hong Kong were subject to salaries tax in Hong Kong.

New regulations to boost corporate transparency in China

Whether it is a market researcher trying to identify business trends in China, a reporter compiling profiles, or a company overseas that wants to conduct due diligence for future investment in China, access to basic information is vital. However, the practice of minimum public reporting in Chinahas limited the access to public information which has made the business environment ripe for bureaucracy and corruption. In order to combat the issue, over the past few years, the PRC government has taken many considerable steps to improve business environment in China.

Regulations of China (Shanghai) Pilot Free Trade Zone released

It has been almost one year now since the Free Trade Zone (FTZ) has been launched.  During this time, a number of regulations have been issued by various authorities, such as the Ministry of Finance, the General Administration of Customs, the Ministry of Transport, People’s Bank of China, etc.

China extends corporate income tax incentives for western region

Three years ago, China’s authorities- Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation issued circular 58 offering tax incentives to companies located in western part of China for its regional development. The circular provided for an extension of the tax incentives for China's western region from 1 January 2011 to 31 December 2020.

China raises a resource tax on crude oil and natural gas

According to the Ministry of Finance (MOF) and the State Administration of Taxation (SAT), China will raise a resource tax on crude oil and natural gas, to take effect on 1st December, 2014.

China taking tax measures to boost small profit businesses

Scope of VAT, Business Tax exemption expands for low-profit businesses

In an effort to further boost the growth of low-profit enterprises and individual enterprises in China, the State Council is working on several tax and administrative measures for small businesses. The measures are expected to offer some concessionary tax treatment, certain tax exemptions and waiver of registration fee in certain cases.

Transfer Pricing: SAT’s call to order

The State Administration of Taxation has released its “Announcement of the State Administration of Taxation and Monitoring and Administration of Special Tax Adjustment [2014] No. 54” on August 29th. The announcement aims at further reminding taxpayers about Transfer Pricing rules as well as well-encouraging new self-adjustments.

China loosens control on outbound securities

In a circular published in May, the State Administration of Foreign Exchange (SAFE) further continued its move towards less regulation and more supervision. The Foreign Exchange Administration Rules on Cross-border Security (Hui Fa [2014] No. 29) simplifies the use of outbound securities. The new rules have taken effect last June. Three categories have been set up by SAFE to distinguish the different kinds of securities, depending on the localization of its obligor, creditor and provider.

Outbound and roundtrip investments: New regulations from SAFE

  Changes introduced before/ after
Authorized scope of SPV* Financing
  Financing and investing

Chinese New Business License: not a fake!

Chinese Administrations have introduced a new Business License, in the wake of the recent amendment of the Chinese Company Lawin the beginning of last year. The issuance of those new licenses has started last March, and formerly-established companies are required to renew their own by February, 28th, 2015. In the meantime, two types are in circulation, the old and the new. Here are the novelties introduced:

Notice 715: SAFE eases foreign exchange regulations

The State Administration of Foreign Exchange (SAFE) has released “Notice 715” simplifying the conversion of foreign currency in registered capital into Renminbi in the 16 pilot zones. Those zones, including areas such as Zhonguancun in Beijing, Binhai in Tianjin or Suzhou Industrial Park, aim at further connect technology and finance. This notice came into force on August 4th and may well ease the way companies manage their funds.

Common problems when registering a WFOE in China

The Wholly Foreign Owned Enterprise (WFOE/WOFE) application process is daunting at first glance. A lot of red tape and bureaucracy, as well as unclear and sometimes contradictory regulations, can lead to some confusion. Here are a few of the common problems that companies have faced in the past when registering a WFOE in China.

Hong Kong New Corporate Law

On 3rd March 2014, the new Hong Kong corporate law (Companies Ordinance) has become effective. It’s the result of enduring negotiations dating back to the year 1984.

Consisting of 80 changes, it constitutes a whole new law. The previous version, renamed in “Companies (winding up and miscellaneous) Ordinance” henceforth only focuses on insolvency and company liquidation issues. All other regulations are going to become inoperative.

The most important changes in brief:

Negative List Shortened in Shanghai FTZ

On July 1st, the Shanghai Free Trade Zone government has released an update of its Negative List, the list referencing the industries in which foreign investments are forbidden. This update reduces the number of restricted industries from 190 to 139, in an effort to increase the zone attractiveness for foreign capital. Key changes affect:

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