Company News

The Indian government on Tuesday agreed to allow 100 percent foreign ownership in single brand retail stores, paving the way for international businesses such as Starbucks, Ikea and Adidas to operate independently in the country without having to involve local partners. Foreign single brand retailers were previously limited to 51 percent ownership.

According to the old Circular guoshuifa[1998] No. 101, overseas social welfare contributions made by employers are exempted from IIT, as long as they are mandatory social insurances with legal basis and such costs are not deducted from the WFOE’s taxable income for corporate income tax (CIT) calculation purposes.

The Ministry of Finance (MOF) and the National Development and Reform Commission (NDRC) recently issued a notice announcing the decision to eliminate 253 items of administrative and institutional fees pertaining to enterprises (“fees”) imposed by provinces, autonomous regions and municipalities directly under the central government, resulting in the reduction of enterprises’ burden by approximately RMB10 billion.

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.