- The New Foreign Investment Law(Draft) Published for Public Comments
On 19th of January 2015, the Ministry of Commerce of PRC published the Foreign Investment Law of PRC (Draft for Comments) (referred to as ‘draft FIL’ below). Opportunities to offer comments on the draft FIL will remain open to the public until 17th of February 2015.
Significantly, the draft FIL transforms the current foreign investment administration system by introducing the administration model combining pre-establishment national treatment policies and the Negative List and stipulating that foreigners intending to invest in one of the areas as specified in the Negative List shall apply for and obtain a foreign investment entry permit beforehand. Also, foreign investors throughout PRC shall perform the reporting obligation regardless of the Negative List. Under this new administrative system, foreign investment in most areas can be admitted to PRC without prior approval by relevant departments. In addition, the draft FIL includes provisions on China’s national security review system, the foreign investment promotion and protection system, supervision and inspection of investment and operational actions taken by foreign investors and foreign invested enterprises, strengthened in-process and after-the-fact administration.
Sourced from the official website of the Ministry of Commerce of PRC:
http://tfs.mofcom.gov.cn/article/as/201501/20150100871010.shtml
- The State Administration of Taxation of PRC Publishes the ‘Notice on EIT Related Issues Concerning Promotion of Corporate Restructurings’
On 25th of December 2014, the Ministry of Finance and the State Administration of Taxation, of PRC jointly published the ‘Notice on EIT Related Issues Concerning Promotion of Corporate Restructurings’ (referred to as ‘Notice on EIT Related Issues’ below).
On the basis of the Notice on EIT Related Issues, the minimum proportion of acquired shares or assets to total shares or assets of a business involved in a share or asset acquisition transaction governed by special tax treatment rules has been decreased from 75% to 50%. As a result, the special tax treatment rules can apply to more kinds of corporate restructurings. Allocation and transfer of shares or assets between enterprises that are under 100% direct control by Chinese citizens within a group, at prices set based on their net book value should be governed by the special tax treatment rules. None of the interested parties shall be held liable to confirm income gained from such allocation and transfer.
Sourced from the official website of the State Administration of Taxation of PRC:
http://www.chinatax.gov.cn/n810341/n810755/c1451490/content.html
- Restriction on Equity Proportion for Foreign Investors in Online Data Processing and Transaction (E-Commerce) Businesses Lifted in SFTZ
On 13th of January 2015, the Ministry of Industry and Information Technology of PRC published the Announcement on Lifting the Ceiling on the Proportion of Shares Held by Foreign Investors in a SFTZ-based Company Dealing in Online Data Processing and Transaction (E-Commerce) Businesses, based on which 100% shares of an eligible business may be held by one or more foreign investor(s).
Sourced from the official website of the Ministry of Industry and Information Technology of PRC:
http://www.miit.gov.cn/n11293472/n11293832/n12845605/n13916928/16407135.html
- Eligible SFTZ-based Companies Now Allowed to Do Parallel Automobile Import Businesses
On 7th of January 2015, Shanghai Municipal Committee of Commerce published the ‘Notice on Allowing SFTZ-based Companies to Do Parallel Automobile Import Businesses’, which provides that a SFTZ-based company shall be entitled to do parallel automobile import businesses, provided that it has dealt in automobile sales for over five (5) years, profiting continuously in the most recent three (3) years and achieving a turnover of more than RMB 400 million in the last fiscal year, immediately before applying with necessary documentation to Shanghai Municipal Committee of Commerce or the SFTZ’s Administrative Committee for the permit to do parallel import automobile businesses in China (Shanghai) Pilot Free Trade Zone, and its application for such permit is approved with the automatic automobile import license being issued by the Ministry of Commerce of PRC.
Sourced from the official website of Shanghai Municipal Committee of Commerce:
http://www.gov.cn/zhengce/content/2014-12/20/content_9309.htm
- The SFTZ’s Administrative Committee Publishes New Regulations on Review and Approval Procedures for Dealing with Business Things for SFTZ-based Companies
On 8th of January 2015, Shanghai Administration for Industry and Commerce, the Administrative Review and Approval Mechanism Reform Leadership Office and the SFTZ’s Administrative Committee jointly published the file titled ‘Prescriptions for Replacement of the Prior Review and Approval System with the After-the-Fact Review and Approval System for Dealing with Registration Applications Filed with the Administration for Industry and Commerce Applicable to SFTZ-based Businesses’, in order to further streamline administrative processes and increase decentralization, relax market entry restrictions, establish a sound inter-department cooperation and information sharing mechanism, standardize various business scopes and strengthen in-process and after-the-fact supervision and control over market entities.
In addition, on 28th of December 2014, the National People’s Congress (NPC) Standing Committee authorized the State Council of PRC to amend provisions on administrative review and approval included in the Foreign Invested Enterprise Law, the Sino-Foreign Joint Venture Law, the Sino-Foreign Cooperative Enterprise Law, the Law on Protection of Taiwanese Investment in PRC, provisionally applicable to businesses in four free trade zones across PRC, including China (Guangdong) Free Trade Zone, China (Tianjin) Free Trade Zone, China (Fujian) Free Trade Zone and China (Shanghai) Free Trade Zone. Such amended provisions will come into effect on 1st of March 2015 and remain valid for trial implementation for three (3) years.
Sourced from the SFTZ’s official website:
- ‘Regulations on Corporate Staff Redundancy (Draft)’ Published for Publish Comments
On 31st of December 2014, the Ministry of Human Resources and Social Security of PRC published the ‘Regulations on Corporate Staff Redundancy (Draft for Comments)’ (referred to as ‘Regulations’ below) for solicitation of public opinions. Opportunities to put forward opinions on the Regulations were open to the public until 31st of January 2015.
In accordance with the Regulations, redundancies of more than 20 employees or less than 20 employees accounting for 10% of the total staff, at one time shall comply with the Regulations and the specialized layoff procedure thereunder.
Sourced from the official website of the Ministry of Human Resources and Social Security of PRC:
http://www.mohrss.gov.cn/SYrlzyhshbzb/zxhd/SYzhengqiuyijian/201412/t20141231_147714.htm
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