Category: Current Year

China cuts bank transaction fees

China will cut bank transaction fee for small and micro-sized enterprises and self-employed individuals. Services affected include bank account services, RMB settlement and e-banking and inter-bank ATM cash withdrawal fees. According to preliminary estimates, the implementation of the fee reduction measures is expected to reduce the annual fee expenditure by about 24 billion yuan (about $3.71 billion). The measures will come into effect at the end of September 2021.

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Support measures for three child policy

To encourage larger families, China has introduced a special additional education expense tax deduction. According to the decision on “optimizing the family planning policy”, taxpayer parents with children under the age of three can now enjoy a deduction for Individual Income Tax (IIT) of RMB 1000 a child per month.

Previously, the tax policy only applied to taxpayer parents with children over the age of three. China’s three child policy was introduced on May 31, 2021.

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Shanghai housing fund contribution adjusted

According to the notice on Adjustment of Shanghai Housing Fund contribution, employees’ housing fund base will now be adjusted from average monthly salaries of 2019 to average monthly salaries of 2020. The maximum housing fund contribution is set at RMB 31,014 and the minimum at RMB 2,480.

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Expats to pay social insurance in Shanghai

According to the “Social Insurance Law of PRC”, a national policy issued in 2011, foreigners working in China are required to contribute to the social insurance program. This includes contributions towards pension, medical insurance, work-related injury, unemployment and maternity. However, in practice the Shanghai Human Resources and Social Security Bureau never enforced the national law, instead adopting a local regulation Notice [2009] No. 38 which allowed for expats working in Shanghai to opt out of mandatory social insurance contribution. This notice was renewed and extended by Notice [2016] No. 301 in 2016 until 15 August 2021.

The Shanghai Social Insurance Bureau has now said that the Notice will not be extended further so foreigners working in Shanghai will also be subject to the national law and obliged to make social security contributions.

Meanwhile, authorities have adjusted the maximum cap on the social insurance contributions to RMB 31,014. The minimum amount is RMB 5,975 from which the social security contribution is calculated.

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SAT simplifies procedure for unilateral APA

On 30 July 2021, the State Administration of Taxation (SAT) announced Notice [2021] No. 24, on “Matters Regarding Application of the Simplified Procedures for Unilateral Advance Pricing Arrangements”. This notice simplifies the negotiation and signing process between taxpayer and tax authority and specifies the time limit for application acceptance.

The simplified procedures now consist of only three phases comprised of 1) evaluation of application; 2) negotiation and signing; 3) monitoring and execution. The requirements for a pre-filing meeting, intention for an APA, and analyses and evaluation have been removed.

The simplified procedures set time limits for tax authorities on the acceptance of APA applications and on the negotiation and signing. Tax authorities must send a Notice on Tax Matters to the submitting enterprise within 90 days of receiving the APA application to inform the enterprise of whether or not the application has been accepted, and negotiation and signing must be completed within six months.

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SAFE requires banks in China to optimize FE procedure

China’s State Administration of Foreign Exchange (SAFE) has released new measures to optimize foreign exchange (forex) banking procedures. According to Hui-fa [2021] No. 13, SAFE requires all banks in China:

• To eliminate the banking review process in the case of current forex banking procedure; this includes payment of overseas education fees by Chinese nationals to an overseas education institution; receipt of overseas salary by Chinese nationals, and receipt of salary from employment in China by foreigners;

• To establish a green channel to deal with “specific/special” foreign exchange transactions by individuals upon checking that a transaction is legitimate;

• To adopt an application declaration form which requires the applicant to guarantee that the application for forex usage is based on valid and legitimate reasons. It holds the applicants legally liable for any untrue disclosure, malpractice or non-compliant acts. The application form can be found at the following link: http://www.safe.gov.cn/safe/2021/0402/18672.html

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