Legal & Regulatory
May 17 – Asia Briefing, in cooperation with its parent company Dezan Shira & Associates, has just released the sixth edition of The China Tax Guide: Tax, Accounting & Audit. Taxation permeates business transactions in China, and a strong understanding of tax liabilities enables foreign investors to maximize the tax efficiency of their foreign investment while ensuring full compliance with all tax laws and regulations. This guide overviews taxes for businesses and individuals, and discusses accounting and audit in the China business context.
This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China operations.
Apr. 29 – China’s Supreme People’s Court (SPC) released the “White Paper on Intellectual Property Rights Protection (2012)” (hereinafter referred to as the ‘Paper’) on April 22, which summarizes the progress China has made in promoting and implementing the national intellectual property strategy in 2012. Detailed information can be found below.
In 2012, courts in China strengthened the judicial protection of intellectual property rights (IPR). As a result, the number of intellectual property-related cases has increased substantially. Specifically:
The number of civil cases received over IPR issues amounted to 87,419 in 2012, up 46 percent year-on-year.
Apr. 9 – The new issue of China Briefing Magazine, titled M&A Regulations in China, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the month of April.
Here we return to a popular subject – China’s M&A regulatory framework. With the global economy slowly coming out of recession, and Chinese businesses wanting to expand both domestically and overseas (issues driven by state policy), we expect to see a gradual upswing in the number of M&A deals being conducted with Chinese companies in the forthcoming months.
However, the subject of M&As in China is far from simple, and many important aspects tend to get glossed over. In actuality, there are many issues to be aware of, such as how to stay in compliance with the offshore equity transfer requirements set forth in Circular 698, and how to structure a transaction so as to minimize your tax obligations. These matters should be fully understood by foreign investors when targeting domestic companies.
Mar. 4 – The Minister for Finance delivered Singapore’s yearly budget to the Singapore Parliament last week. The main focus of the budget was to continue the process of restructuring Singapore’s economy by increasing the productivity of its workforce, reducing Singapore’s dependence on its foreign workforce and providing incentives to encourage local businesses to be more efficient.
The Singaporean Government initiated various policies to meet the social demands of the population, including increasing staff salaries through Governmental credits and cooling the Singapore residential property market to allow more Singaporeans to enter. To fund these policies, some tax incentives that were previously available were withdrawn, and greater taxes on investors in Singapore’s high-end residential property market were instated.
Below is a summary of the key Budget initiatives that may impact non-residents looking to invest into Singapore.
Mar. 1 – The new issue of Asia Briefing Magazine, titled Expanding Your China Business to India and Vietnam, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore throughout the months of March and April.
As operational costs in China continue to rise, an increasing number of companies are looking at either relocating or moving part of their China-based facilities to lower cost markets elsewhere in emerging Asia. This makes sense since China itself is trying to move away from an export-driven economy and into a consumption-driven growth model.
Meanwhile, countries such as Vietnam are actively courting these export businesses through tax incentives and preferential policies similar to those that helped China get to where it is today. India, too, with its abundant, young and inexpensive workforce, coupled with a massive consumer market, is looking strikingly similar to China 20 years back.
Mar. 1 – The Singaporean Government recently released its 2013 budget in which it revealed new measures totaling SG$5.9 billion aimed at helping businesses, facilitating investment and spurring further growth.
Corporate income tax was a targeted issue, with the Government announcing that it would provide a 30 percent tax rebate on tax assessments during 2013-2015. The rebate will be capped at SG$30,000 per annum per business, but is worth an extra SG$90,000 over the next three years.
Furthermore, the Productivity & Innovation Credit (PIC) scheme was revised so that it now entitles businesses that incur a minimum SG$5,000 of PIC qualifying expenditures to receive a matching cash grant from the Singaporean government of up to SG$15,000 per year until 2015. More importantly, the revision does not replace or lower the existing PIC benefits, but instead entitles companies to a 400 percent tax deduction/allowance (up to SG$400,000) or a cash payment of 60 percent of any PIC qualifying expenditures (up to SG $100,000).
Feb. 28 – The cultural and work ethic differences between China and democratic Asia have been bought into sharp focus with the jailing in Singapore of four Chinese bus drivers and the deportation of a further 29.
The incident occurred after the drivers, hired from a mainland agency, decided to go on strike after learning of a salary differential between them and drivers doing the same job from Malaysia. The action resulted in disruption to Singapore’s bus routes making many commuters unable to get to work.
Although labor laws in China favor and support workers in disputes with their employers, strike action in Singapore is illegal.
The Singaporean bus company SMRT admitted that the Chinese drivers were paid less than those from other countries, but this was because they were also provided with accommodation. They did agree that some living conditions could be improved and stated they would make corrections to the dormitories.
Feb. 19 – The number of foreign laborers coming to Vietnam for work has steadily increased in recent years, from 52,633 people in 2008, to 55,428 in 2009, and 56,929 in 2010. However, by September 2011, the number of foreign workers in Vietnam had surged to 78,440 people.
A large portion of the foreign workers in Vietnam originate from Asian countries such as Korea, China, Japan and come as employees of foreign contractors in Vietnam. More and more come to work for or establish foreign direct investment (FDI) projects in Vietnam.
A Vietnamese entity is permitted to recruit foreign workers in order to work as managers, executive directors and experts where local hires are not yet able to meet production and business requirements. Unlike in certain other Asian countries, Vietnamese representative offices are also able to hire staff directly.
Jan. 17 – Foreign-invested commercial enterprises, commonly known as FICE, are fast becoming an ideal way for foreign investors to enter China’s Mainland market. Previously, foreign companies could only form trading companies on their own if they registered in the country’s Free Trade Zones. However, as part of China’s WTO commitment to let foreign-invested enterprises exercise trading and distribution rights, starting from December 11, 2004, foreign investors have been allowed to set up FICE in the country to conduct wholesale, retail, and other permitted businesses.
Jan. 7 – The new issue of China Briefing Magazine, titled Annual Compliance, License Renewals & Audit Procedures, is out now and will be temporarily available as a complimentary PDF download on the Asia Briefing Bookstore through the months of January and February 2013.
In this issue, we discuss annual compliance requirements for China foreign-invested entities, with notes on regional differences and tips from experienced accountants and auditors. Many Western parent companies today are concerned by the perfunctory nature with which annual compliance procedures are carried out in China, and with good reason. Chinese audit reports roll into group audit reports, and thus it is imperative to have confidence in these figures. Furthermore, annual compliance procedures, when conducted with care, can tell stories about what’s going on behind the scenes in a company’s operations. We detail the full audit processes for representative offices, wholly foreign owned enterprises, and joint ventures in China.