China Laws and Regulations Update in July 2019

1.Circular Notice on Issuing the Overall Plan for the Lingang New Area of the China (Shanghai) Pilot Free Trade Zone

Promulgated by the State Council

Document Number: G.F.(2019) No.15

Promulgation date: 27 July 2019

To follow the principles of the Notice, there will be a well-designed set of rules to facilitate free trade and investment in the new area, including allowing well-known overseas arbitration and dispute resolution organizations to do arbitration activities as businesses; creating the Yangshan Special Comprehensive Bonded Area to cancel unnecessary trade regulation, permit and process requirements on the basis of full implementation of comprehensive bonded area policies; studying and using free trade accounts that combine RMB and foreign currency payment functions on experimental basis, exploring free capital flow into and out of and free capital exchange in the new area; treating international transport by ships manufactured in the country and registered in “Yangshan Port, China” as exports entitled to tax rebate; implementing globally competitive tax rules and policies, reducing enterprise income tax and other tax rates applying to eligible businesses doing manufacturing and research activities in most important parts of key areas such as integrated circuits, artificial intelligence, bio-medicine and civil aviation in the new area to 15% within five years after the business establishment date. (Source: Website of the State Council)

2.Notice on Implementation of the Catalog of Industries in Which Foreign Investment is Encouraged (2019 Edition)

Promulgated by the General Administration of Customs

Document Number: No.125 GAC Notice 2019

Promulgation date: 24 July 2019

Implementation date: 30 July 2019

According to the Notice, from 30 July 2019, in foreign investment projects (including capital increase projects, as below) included in the Catalog of Industries in Which Foreign Investment is Encouraged (2019 Edition), equipment imported for personal use and covered by the total investment and technology and auxiliary and spare items imported together with such equipment by contract, except products included in the Catalog of Imported Products Excluded from Duty-Free Foreign Investment Projects and the Catalog of Important Technology Equipment and Products Excluded from Duty-Free Imports, are exempt from duties under the Circular Notice of the State Council on Alteration of the Tax Policy on Imported Equipment (G.F.[1997] No.37), the No.103 Announcement of the General Administration of Customs and other regulations, not including value-added tax on imports required by relevant rules. (Source: Website of the General Administration of Customs)

3.Notice on Publishing the Customs Notice on the China International Import Expo 2019 and the Customs Measures for Convenience of the China International Import Expo 2019

Promulgated by the General Administration of Customs

Document Number No.26 GAC Notice 2019

Promulgation date: 9 July 2019

Implementation date: 9 July 2019

The contents of the Customs Notice include exhibit approval and admission, overseas material declaration, inspection and release of exhibits, in-process supervision of exhibitions, disposal of exhibits. The Measures for Convenience include tax guarantee given by exhibition organizers, extension of the limited period of time for which exhibits under the ATA license are allowed in our country, simplified exhibit export formalities, allowing customs registered businesses in the special customs-regulated area or the bonded logistic center (type B) (“Regional Center”) to transport guaranteed bonded goods to the permanent venue of the import expo for exhibition, sales and other businesses outside Regional Center. (Source: Website of the General Administration of Customs)

4.Rules on Administering China-Based Representative Offices of Overseas Securities and Future Exchanges

Promulgated by CSRC

Document number: No.157 CSRC Order

Promulgation date: 25 July 2019

Implementation date: 25 July 2019

The Rules, which consists of eighteen articles, states that the scope of activities of representative offices is “not-for-profit activities such as communication and researches”; for market agency activities, replaces the pre-approval system with the post-reporting system and adds a negative list containing business related information that are prohibited such as product details, account opening and transaction methods and transaction prices; further clarifies prohibited matters, mainly including agreements or contracts between a representative office or its personnel and a legal or natural person, which could increase income of the representative office or its overseas office, direct transaction related services for domestic entities and people and other activities prohibited by law or rule. (Source: Website of CSRC)

5.Decision on Amending the Detailed Rules on Implementation of the International Sea Transport Rules of the People’s Republic of China

Promulgated by the Ministry of Transport

Document number: No.21 MOT Order 2019

Promulgation date: 21 June 2019

Implementation date: 21 June 2019                            

The amendments this time include removal of provisions of “international ship management permit” and “approval for foreign funded international sea transport and allied businesses” and revision of provisions that do not accord with current open-up policy. (Source: Website of the Ministry of Transport)

6.Circular Notice on Issuing the Reform Plan for Further Improving the Withdrawal System for Entities in the Market

Promulgated by thirteen departments including the Development and Reform Commission, the Supreme People’s Court and the Ministry of Finance

Document number: F.G.C.J.(2019) No.1104

Promulgation date: 22 June 2019                           

The Notice states that a study of individual insolvency rules will be done to address the issue of natural person’s joint liability for secured obligations arising from business bankruptcy and that natural people can be legally exempt from obligations connected with production and business activities arising from warranty, etc. and will be legally exempt from some of consumer obligations in order to establish a complete set of individual insolvency rules. (Source: Website of the Development and Reform Commission)

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