Trademark Certificates to be paperless
Starting from January 2022 China’s National Intellectual Property Administration will no longer provide paper trademark registration certificates. Applicants will receive the “Notice of obtaining trademark registration certificate” and can download online the electronic trademark certificate according to the website and password in the notice.
Personal Information Protection Law
On November 1, 2021, China’s Personal Information Protection Law (“PIPL”) came into effect following its promulgation on August 20.
Under the PIPL, personal information as age, address, phone number, and sensitive personal data including biometric identification, religious beliefs, medical information and financial accounts are considered sensitive information. Employers must obtain their employees’ explicit written consent to collecting such data and must also clearly notify employees about the purposes of such data collection, how the data will be processed, and how long it will be retained.
In terms of transferring information outside China, companies collecting personal information to that prescribed by the authorities are required to conduct a cross-border transfer review of it before they can export it out of China. Without the approval of the competent authority, companies in China are forbidden from providing personal information stored within China to any foreign judicial or law enforcement authorities.
Notably, the PIPL significantly raises penalties for infringements. In severe cases, a violating organization may be fined up to RMB 50 million or 5% of its revenue of the preceding fiscal year. Individuals responsible are subject to a fine up to RMB 1 million, as well as being prohibited from serving as directors, supervisors, senior managers and personal information protection officers. If any illegal processing of personal information constitutes a criminal offence, administrative regulators will hand over the case to public security organs.
In order to protect individuals’ personal information, the PIPL introduces a public interest litigation mechanism. For violations of the rights of a large number of people, procuratorates, consumer rights organizations, and other competent organizations may bring a class action against the entity on behalf of the victims. It is worth noting that in addition to civil damages, liability can trigger administrative and criminal penalties.
Companies in China are now working to assess their compliance with the new provisions. The law is expected to bring about significant changes to internal management organization and rules, contracts, marketing materials, websites and to the transferal of information outside of China. In view of the impact of the PIPL companies are advised to carry out the relevant verifications and modifications. It is also important to improve the process of collection process of personal information of app users and employees.
Statutory National Holidays 2022
China’s General Office of the State Council has released Circular No. 11 “Notification of Holiday Arrangements in 2022” laying out the official national holiday schedule for 2022 as follows:
| Holiday | Days off in 2022 | Adjusted working days in 2022 |
| New year | January 1-3 | |
| Spring Festival/Chinese New Year | January 31- February 6 | January 29 & 30 (Saturday & Sunday) |
| Qingming Festival | April 3-5 | April 2 (Saturday) |
| Labour day | April 30 -May 4 | April 24 (Sunday) and May 7 (Saturday) |
| Dragon Boat Festival | June 3-5 | |
| Mid-Autumn Festival | September 10-12 | |
| National Day | October 1-7 | October 8 & 9 (Saturday & Sunday) |
Note: for work on January 1, February 1-3, April 5, May 1, June 3, September 10 and October 1-3, employees must be paid three times their normal wage. For work on January 2-3, February 4-6, April 3-4, 30, May 2-4, June 4-5, September 11-12, October 4-7, their salary is double their regular wage.
The adjusted working days (Saturdays and Sundays) are additional official workdays in China to compensate for long holiday breaks and are to be paid at the regular wage rate.
HK Added To Eu’S Tax Watchlist
On 5 October the European Union announced Hong Kong’s inclusion on its “grey list” on non-cooperative tax jurisdictions. Hong Kong does not tax foreign-sourced passive income, which allows enterprises receiving such income (such as rent, dividends, royalties derived from elsewhere) to avoid tax completely if they do not have any significant economic activity in the territory. The EU sees this as potentially creating situations of “double non-taxation”.
In response, Hong Kong has agreed to implement measures in 2023 to target enterprises that make use of passive income to evade tax elsewhere, particularly those without substantial economic activity in the territory (mainly offshore shelf companies). Companies that use structures in Hong Kong to declare active income (meaning trading, manufacturing or service income) are unlikely to be affected.
Notwithstanding this effort to be removed from the EU’s watchlist, the Hong Kong government has stressed that it intends to maintain the principle of taxation based on territorial source and will endeavour to uphold its simple, low-tax regime in order to maintain the competitiveness of Hong Kong’s business environment.
China To Defer Tax Payment For Manufacturing Enterprises
On October 27, The State Council’s executive meeting chaired by Premier Li Keqiang decided to postpone the tax payment for small and medium-sized enterprises (SMEs) in the manufacturing sector.
For small and medium manufacturing enterprises (including individual businesses) with annual sales revenue of less than 20 million yuan, all tax will be deferred. For small and medium manufacturing enterprises with annual sales revenue of 20 million to 400 million yuan, the tax will be deferred at a rate of 50%. Enterprises with special difficulties may apply for full tax exemption in accordance with the law.
From November 1st 2021 to the end of the application period in January 2022, the tax exemption is expected to reach about 200 billion yuan for small and medium manufacturing enterprises.
In addition, to ease the operating difficulties of coal power and heat supply enterprises, the payment of tax in the 4th quarter of this year will be postponed. The above measures will be deferred for up to three months.
China Approves New Property Tax
On 23 October 2021, the Standing Committee of the National People’s Congress (NPC) approved a property tax pilot scheme.
The levy will be limited to a group of pilot cities, and will apply to both residential and non-residential properties and will last for 5 years.
Currently, real estate has been taxed only in Shanghai and Chongqing. Shanghai collects property taxes from homeowners with second properties at an annual rate of 0.4% and 0.6% of the property price, depending on the size of the property, while Chongqing imposes taxes of 0.5% to 1.2% on villas and luxury apartments.
New Changes To Tax Surcharges
According to the Announcement of SAT [2021] No.26 and No.28 of the State Taxation Administration (SAT) on Matters concerning the Collection and Administration of Urban Maintenance and Construction Tax which came into effect on September 1st 2021, urban maintenance, construction tax maintenance and education surcharges will not be levied on the amount of VAT or consumption tax paid for imported goods or for labor services, or services and intangible assets sold by overseas entities or individuals to China.
New Changes To Tax Surcharges
The new China Individual Income Tax law (IIT law) which took effect in January 2019 made significant changes for the tax calculation on the individual’s annual bonus, which take effect in January of next year.
Until 31 December 2021 the annual bonus, paid to employees both foreign and Chinese once a year, is taxed separately from the salary with a preferential tax calculation method that allows the amount of the bonus to be divided by 12 and a preferential tax rate applied.
Under the new law, starting from 1 January 2022 the preferential tax treatment will no longer be used and the year-end bonus will be included as part of the individual’s annual salary and taxed at the regular IIT calculation rate.
The upcoming implementation of this aspect of the IIT Law is likely to raise company personnel costs.
New Tax Calculation Method For Individual Annual Bonus
The new China Individual Income Tax law (IIT law) which took effect in January 2019 made significant changes for the tax calculation on the individual’s annual bonus, which take effect in January of next year.
Until 31 December 2021 the annual bonus, paid to employees both foreign and Chinese once a year, is taxed separately from the salary with a preferential tax calculation method that allows the amount of the bonus to be divided by 12 and a preferential tax rate applied.
Under the new law, starting from 1 January 2022 the preferential tax treatment will no longer be used and the year-end bonus will be included as part of the individual’s annual salary and taxed at the regular IIT calculation rate.
The upcoming implementation of this aspect of the IIT Law is likely to raise company personnel costs.
Shanghai BOC tightens supervision of company address modification
In order to complete the modification of a company’s legal address, the Bank of China in Shanghai now requires that a bank officer pay a visit to the new legal address of the company accompanied by the legal representative or chief financial officer of the company.
