By Steven Elsinga and Grace Tate
Apart from placing full time expatriate employees in China, as an investor you may often need to send staff from the parent company to China to complete temporary projects. Common examples include quality control, engineering projects, training or consultancy. However, what many foreign investors don’t know is that such visits may result in the parent company being subject to a wide array of Chinese taxes. This may even be the case if the company already has a subsidiary in China.
So how does this work? Obviously, a foreign-owned company incorporated in China is subject to Chinese tax. However, if a company registered abroad is deemed to have ‘permanent establishment’ in China, it will be subject to Chinese tax as well, such as Corporate Income Tax, VAT and other local surcharges. This would happen if the foreign enterprise has a business venue or construction site in China, is represented in China by an agent, or – most relevant to the topic at hand – dispatches personnel to China to provide services. This includes services rendered to the local subsidiary.
Op-Ed Commentary: Chris Devonshire-Ellis
Chinese President Xi Jinping has signed off on US$5 billion worth of trade deals with the country’s northern neighbor Mongolia, and pledged to assist with further opening up what remain important and potentially lucrative mineral deposits in the country. Bilateral trade, currently running at some US$6 billion per annum, accounts for close to 90 percent of all Mongolian exports. Yet Mongolian wariness as concerns China – which dates back centuries – means that both countries will need to tread carefully to hit future bilateral growth and development plans.
Mongolia has already made a strategic choice concerning its destiny once before, when in the 1920s they opted, in a no-win independence political struggle of the time, to side with the Russians when faced with imminent occupation by either Russia or China. Wary of Sinification and acutely realistic concerning contemporary Tibetan history, Mongolia has to play a careful strategic position with China in order not to become over dependent.
In a bid to further boost trade with China and address the increasing demand for transport and infrastructure, Myanmar is implementing a Central Economic Zone in the border town of Muse, project officials announced last Tuesday.
Following a series of economic and democratic tax reforms intended to encourage foreign direct investment, Myanmar saw FDI increase from US$300 million in 2009-10 to US$20 billion in 2010-11 and a resulting rise in GDP rate from 5 percent in 2009 to 6 percent in 2012.
China leads among East-Asian nations in the Global Retail Development Index, ranking second globally. Other Eastern Asian nations in the index include Malaysia (9), Indonesia (15), Sri Lanka (18), India (20), the Philippines (23) and Vietnam (28).
Op-Ed Commentary: Chris Devonshire-Ellis
The most recent FDI data from the World Bank shows that China and the larger ASEAN nations have performed well the past 18 months in terms of generating increased foreign direct investment. The data, which covers 2013 figures in total, show a 17.7 percent overall increase in FDI for China, yet an even more impressive 20.4 percent for the Philippines and 19 percent for Malaysia. The Philippines data may seem overly strong given the much publicized spat with China over disputed islands, yet this has clearly, as was stressed at the time, not manifested in a slowdown of investment. Both the Philippines and Malaysia remain strong destinations for Chinese as well as other foreign investment.
Going into the second half of 2014, office rental around Asia continues on the up and up, though analysts are cautious about the effect of the slowing Chinese economy on the rest of the region, according to a recent report.
On the back of rising economic sentiment and tightening supply, prime markets in Hong Kong, Singapore, Tokyo and Bangkok saw solid rental growth in both price and volume, according to the Q2 Asia Pacific Prime Office Rental Index by Knight Frank.
After years of strengthening economic relations, Taiwan and the Philippines are expected to continue experiencing increasing amounts of bilateral trade, according to Taiwan’s Ministry of Economic Affairs, with trade volume between the two countries doubling from US$6.05 billion in 2009 to nearly US$12 billion in 2013.
Current figures make the Philippines the seventh largest export destination for Taiwan, as well as its 11th largest trading partner. Conversely, Taiwan is the fifth largest source of imports and 11th largest destination of exports for the Philippines.
In 2012, trade between the two countries totaled US$6.8 billion. The Philippines exported US$1.94 billion in goods to Taiwan, while imports from Taiwan stood at US$4.86 billion.
Asia stands to reap large economic rewards with investment into smart-climate practices, according to the World Bank and the ClimateWorks Foundation.
In a new report, “Climate-Smart Development: Adding Up the Benefits of Actions that Help Build Prosperity, End Poverty and Combat Climate Change,” analysts assessed the potential economic, environmental and health impacts of three government policies across six world regions.
Singapore is the best shipping hub in the world, with Hong Kong and Shanghai also in the top 10, according to a new report on international shipping centers released last week.
The 2014 Xinhua-Baltic Exchange International Shipping Center Development Index Report, which is the first report of its kind, was a joint project by the Baltic Exchange and the China Finance Corporation.Asian ports took six places in the top 10, which comprised of Singapore, London, Hong Kong, Rotterdam, Hamburg, Dubai, Shanghai, Tokyo, New York and Busan.
The index assessed 46 shipping hubs around the world against three fixed criteria, namely maritime services such as insurance, engineering and brokerage (50 percent), overall environment (30 percent) and port facilities (20 percent).
Upon the completion of Indian Vice-President Mohammad Hamid Ansari’s five-day visit to China, the two countries signed three Memorandums of Understanding (MoUs) yesterday. The MoUs include mutual agreements on the development of joint industrial parks, sharing of hydrological data for the Brahmaputra River, as well as exchanges of their respective administrative academies.
The first MoU is designed to set up incentives and frameworks to attract foreign direct investment from China to Indian industrial parks and zones. The MoU states that an Industrial Park Cooperation Working Group, consisting of an equal number of Chinese and Indian members, will work toward finalizing details and consolidating mutual cooperation in promoting India’s industrial parks.