Company News

To resolve the issue of duplicate taxation on goods and services and support the development of the modern service industry, the State Administration of Taxation (SAT) and Ministry of Finance (MOF) issued the “Pilot Project Plan for Replacing the Collection of Business Tax with Value-added Tax (caishui [2011] No. 110)” (“Pilot Project Plan”) in November 2011.

In November 2010, the Ministry of Finance issued a circular (caizong [2010] No. 98, “Circular 98”) unifying Local Education Surcharge (LES) at 2% for all enterprises and individuals (including FIEs).

The National Development and Reform Commission and the State Administration of Commerce promulgated the 2011 version of the Foreign Investment Industrial Guidance Catalogue (2011 Catalogue) on December 24, 2011, which will take effect January 30, 2012.

On December 27 the Dalian Social Insurance Fund Management Centre released a document stating that the cap on contributions by employers to the various social insurance funds are to be re-instated (as they had been removed from September 2011) and that the previous method for the calculation of bases for contributions would also be re-adopted (this was also changed as of September 2011).

The State Administration of Foreign Exchange (SAFE) issued the Supplementary Circular on Issues Relating to Improving Business Operations with Respect to the Administration over Payment and Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (Huizongfa [2011] No. 88, “Supplementary Circular”) on July 18, 2011, which came into effect on August 1, 2011.

On November 8, 2011, a comprehensive agreement for the avoidance of double taxation (DTA) was signed between the Hong Kong special administrative region government and the Maltese government. It will come into force after both governments finalize their respective ratification procedures.

In the pursuit of a more environmentally friendly economy, the Chinese government has recently laid out a blueprint on pollution reduction goals between 2011 and 2015. Experts believe the new plan will shift the future investment focus in China from infrastructure development to “green” projects.

China’s Ministry of Finance recently published the “Tariff Implementation Plan 2012 (shuiweihui [2011] No.27),” where it clarified both import and export tariffs on specific products for next year.

Supplement VIII to the Mainland and Hong Kong Closer Economic Partnership Arrangement (“CEPA” or “Arrangement”), signed on December 13, 2011 in Hong Kong, will come into effect on April 1, 2012.

The permanent account number (PAN) card, issued by the income tax authorities, is now broadly used in financial transactions and one of the most convenient proofs for identity.