China Has Amended the Individual Income Tax Law

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On 31st August 2018, the Fifth Session on the Standing Committee of the 13th National People's Congress passed the Amendments to the PRC Individual Income Tax Law (IIT Law).

The main objective of the IIT Law amendments is to ease the tax burden on low and middle income earners. This is achieved by raising the IIT threshold and adding further deductible expenses. Thus, from 1st October 2018, the minimum threshold for personal income tax will be increased from RMB 3,500 per month to RMB 5,000 per month.

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What Effects Will the New Customs Regulation Have?

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The General Administration of Customs issued regulation No.56 on the adjustment of manifests and means of water and air transportation for imports and exports in China. The regulation included details on electronic data declaration and filing specifications, amongst other things. The regulation took effect on 1st June 2018. 

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The Shifting Supply Chain in Asia——By Daniel Krassenstein

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During this year’s Autumn Partners Event, Daniel Krassenstein gave a fascinating presentation on “The impact of the Trade War on the supply chain between USA and China”

Daniel is the Director of Asia Operations for Procon Pacific, a global packaging solutions company, and has over 30 years’ experience across the world in international supply chain management. Being been based in Shanghai for the past 13 years, he is an expert in the Chinese supply chain process.

While most are concerned with the current ‘Trade War’ between China and the USA, what Daniel interestingly noted is that China and USA are both on divergent paths. In fact, the trends in Global supply chain show that a natural shift is taking place, with manufacturing moving to South and South East Asia, particularly India and Vietnam, as opposed to a shift influenced by trade sanctions.

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PTL Group introduction

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The Challenges of WOFE Deregistration

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Case Study 1

Company X was training individuals as support workers for other companies. The Chinese government invested a lot of money into the company, giving them grants and loans, as an incentive to set up in China. The process to recruit and train the support workers was time-consuming and expensive, eventually after several years the company decided to shut down after not seeing enough returns for the time it had invested.

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China Boosts Foreign Investment by Cutting Down the Negative List

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The Chinese government is offering incrementally greater market access to foreign investors in China by reducing the negative list:

China’s National Development and Reform Commission (NDRC) and Ministry of Commerce (MOFCOM) jointly released the “2018 Special Administrative Measures on Access to Foreign Investment” (外商投资准入特别管理措施(负面清单) and the 2018 version of the “Special Management Measures for the Market Entry of Foreign Investment in Pilot Free Trade Zones”  (自由贸易试验区外商投资准入特别管理措施 (负面清单), which came into effect 28th July 2018.

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Google May Return to the Chinese Market

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The background

Censorship of internet content is something that can be seen all over the world at varying levels. China is also well known for its restrictive internet.

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Eight Highlights of the New E-commerce Law

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On 31st August 2018, the fifth meeting of the Standing Committee of the 13th National People's Congress was held in Beijing. The meeting passed the "Electronic Commerce Law", which will be implemented from 1st January 2019. This will be the first comprehensive law in the field of e-commerce in China that will regulate e-commerce behavior and guarantee the legitimate rights and interests of the main parties involved.

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Imported Goods See a Reduction in Tariffs

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The Customs Tariff Commission of the State Council issued an announcement regarding a reduction of tariffs on imported goods. The purpose of such a reduction is to meet the needs of the Chinese citizens, improving their quality of life, while promoting both structural reforms and openness of the Chinese market. Since 1st July 2018, the MFN tariff rates of 1,449 imported consumer goods have been lowered.

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The first ever China International Import Expo (CIIE)

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The first ever China International Import Expo (CIIE) will take place this November in Shanghai. The Expo’s objective is to provide new opportunities for foreign countries & companies to expand their exports to China, sending a clear message to overseas investors: China is eager to open its market to new products and services from abroad. This initiative is just another tangible example of the government’s interest in affirming its openness to the globalized world.

The expo will be organized into two main areas: country pavilions for trade and investment, which will exclusively showcase products from a specific country or region, and the enterprise & business exhibition, which will allow foreign companies to exhibit themselves in two distinct sections: trade of goods (180.000) and trade of services (30.000). It is expected that a variety of sectors will be represented: High-end intelligent equipment, Automobile, Accessories & consumer goods, Culture & education, and many more. Consult the full list on the official CIIE website.

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International Leading IC Foundry’s Business Journey in China——An Interview with TowerJazz China Country Manager-Mr. Lei Qin

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Q: Could you please introduce the business and the history of TowerJazz?

A: TowerJazz, the global specialty foundry leader, specializes in manufacturing analog integrated circuits for more than 300 customers worldwide in growing markets such as automotive, medical,industrial, consumer and aerospace and defense, among others. Currently TowerJazz’s main business in China focuses on serving fabless companies by offering a broad range of customizable process technologies, including SiGe BiCMOS and RF CMOS (SOI and bulk) for radio frequency and high performance analog (HPA)applications; CMOS image sensor (CIS); power management, including BCD and 700V and its patented Y-Flash, the leading solution for non-volatile memory (NVM)and mixed-signal CMOS.

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Easier Market Access for Foreign Payment Firms: New Opportunities For Companies!

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Rules for foreign-invested payment firms over Chinese market access have recently been changed by China’s central bank to promote openness and equality in their treatment towards foreign payment firms as compared to local payment firms. 

So far, foreign payment services have not – or hardly – been able to make RMB settlement in China. Even though global market leaders’ payment services, like Visa & MasterCard, are functional in Chinese market, but the payment is done through Union Pay settlement channel.  

These firms are required to have secure, regulated transaction and recovery systems in China with the capacity of processing payment services individually, according to the People’s Bank of China (PBOC).

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China Reduces Value Added Tax Rates and Adjusts Threshold

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In line with last month announcement of implementing major value added tax (VAT) reform in 2018, China announced the first step in this reform process was enacted on the 1st of May. Two major changes are expected following this announcement: the first being a 1% VAT rate reduction for general tax payer and the second being an increase in the threshold for compulsory registration as general tax payer. These measures will apply to both domestic and foreign-funded companies (joint ventures, WOFE…) which is good news for all business entities in China. We delve a bit deeper to explore the impact of this announcement.

1% VAT Rate Reduction

Over the VAT three-tiered rate structure (17%, 11% & 6% rates), the 17% and 11% rates will be decreased to respectively 16% and 10%. The statement did not indicate any changes to the 6% VAT rate. 

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New Policy Changes: Simplifying Company Set Up, Construction Projects & Obtaining Access to Government Services

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The Chinese authorities have recently announced new policies for easing business in China. Some measures will be taken to simplify and drastically reduce approval time for starting a foreign-invested enterprise (FIE), construction projects, and accessing government services. The measures will be implemented in specific areas of the country first, and then will apply nationwide by the first half of 2019.

Business Establishment Regulations: One-Stop, One-Form

By June 30, the previous long and complex process to set up a new foreign-invested business will be turned into a “one-stop, one-form” procedure, slashing through the bureaucratic processes. Filling and registration process will be executed together, in one single office or online, allowing for the possibility to submit an electronic application. Previously, one needed a paper-registration and had to apply in person. This will no longer be necessary. Additionally, they have removed the need for company names to be approved in advance, and are planning to reduce the processing time for invoice applications and insurance registration. 

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China to Take 7 Major Measures to Cut Taxes for SMEs and High-Tech Firms

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Following China government’s objective to ease business for foreign investors and businesses, new policies will take place in order to alleviate financial pressure on small & medium companies in addition to high-technology firms. It was announced that 7 measures will be applied nationwide starting this year, after a successful test period in eight zones that included Beijing, Shanghai, & Suzhou industrial park. In the long term, such measures are expected to reduce the tax burden of more than 60 billion RMB (equal to 9.4 billion USD) for SMEs and high-tech firms in China.

The 7 Actions Plan

Over the VAT three-tiered rate structure (17%, 11% & 6% rates), the 17% and 11% rates will be decreased to respectively 16% and 10%. The statement did not indicate any changes to the 6% VAT rate. 

1.Raise the per-unit value of newly purchased R&D instruments and equipment that is eligible for a one-time tax deduction from 1 million RMB (157,000 USD) to 5 million RMB (784,000 USD).

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Update to Work Permit Renewal Process in China Announced

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This December, the China State Administration of Foreign Expert Affairs announced a change in the foreigner work visa renewal process that will affect every foreigner in China. The announcement states that all applications to renew their Chinese work permit must be submitted at least 30 days before the expiration on their permit. This means that all required paperwork must be prepared well in advance of the renewal period. The new regulation is to take effect on February 28th, 2018, just days after the 2018 Chinese New Year holiday.

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New Chinese “High-end Talent Visa” for foreigners is implemented in 2018

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China introduces a new free, fast-track visa, for “high-end” foreign talent. The report, released by the state news agency Xinhua, stated that under new policy from the State Administration of Foreign Expert Affairs, applicants who qualify for the Certificate for Foreign High-End talent can obtain the new visa as fast as five working days. With this certificate applicants can apply for new 5 or 10 year multiple entry visas.

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China Slashes Import Tariffs on Consumer Goods

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Beginning December 1st, 2017, The Ministry of Finance has stated that there will be a cut on import tariffs on a diverse range of consumer products. This initiative comes as an effort to facilitate the increasingly varied domestic demand and to aid the “consumption upgrade”. As foreign imported good are seen as higher quality and safer than locally produced products, they are currently more desirable to consumers hence, and this initiative is hoped increase consumer spending.

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What Awaits in China 2018: A More Dynamic and Flourishing Market —— An interview with PTL Group GM-Arie Schreier

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on Wednesday, 10 January 2018
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Q: How do you see the market shifting in China?

A: The type of international company that is entering the Chinese market is shifting from a more traditional manufacturing and industrial company to start-ups in the tech and internet industries. About 5 years ago, our feeling as an organization had been that everyone who wanted to enter the China market was already here, or that people had tried, failed, and then left. Concurrently, we began to witness a huge start-up boom not only around the globe but also in the Israeli market, which brought new entrants and clients for PTL Group—and they keep coming. Many Israeli companies have taken advantage of both Chinese and Israeli government grants to help support market entry in China. This aid smoothed the way for companies that would not have entered the China market without access to special economic zones such as dedicated industrial parks, and specific policies that allowed an easier entry.

These start-ups are not just Israeli businesses trying their hand in the Chinese market, some are set up exclusively for the Chinese market. One such example is PTL client UgaUga—an innovate baking products startup that specializes in cake mixes that are optimized for easy baking within a rice cooker, since ovens are not a common appliance in a Chinese household.

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The Inside Scoop: How to use the 144-hour Transit Visa

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China’s introduction of a 144 hour visa means that it is even for tourist to spend up to six days within the country without the hassles of the visa office. The visa was introduced with the aim at boosting business and tourism within the country.

There are certain rules and regulations that must be determined first in order to first qualify for the visa free entry. Firstly and most importantly is determining ones eligibility. There are only 53 countries that qualify for the visa free transit. The full list can be found here, which includes such countries as the United States, UK, Japan, South Korea and Australia.

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