China Regulatory Brief: ICC Opens Office in Shanghai FTZ, VAT Reform to be Fully Implemented by May 1

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The International Chamber of Commerce to Open Office in Shanghai Free Trade Zone

On February 24, the International Chamber of Commerce (ICC) announced that it has received an official license to open a representative office in Shanghai’s Free Trade Zone, and will be the the first non-Asian headquartered dispute resolution institution to establish an office in mainland China. The license facilitates the ICC Court’s expansion and increased engagement across Asia after the recent appointment of a regional director for South Asia and the opening of the ICC offices in Hong Kong in 2008 and Singapore in 2010.

There has been a 12 percent rise in the number of Chinese parties involved in ICC Arbitration cases filed in 2015 compared with 2014, according to ICC statistics. The ICC has expressed that having a presence in Shanghai is an important step to widening its geographical coverage, not only to serve potential users in China, but across the whole of the North Asia region.

China’s VAT Reform on Schedule to be Fully Implemented on May 1

On March 7, China’s Minister of Finance Lou Jiwei announced that China’s VAT reform, which will merge business tax with VAT, is to be completed on schedule by May 1 this year. The reform, which started in 2012 as a trial program, will be fully extended to include financial services, construction and real estate, and consumer services such as food, catering, and accommodation. Plans to enact the reform in October last year were delayed because of the forecasted impact it would have on the complex target sectors. So far, the VAT pilot reform has been applied to railway transportation, postal services, telecommunications and certain modern service sectors such as IT, film and television.

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Preferential Tax Policy to Continue During Business Tax Reform

On March 8 2016, the Ministry of Finance’s Director of General Office Ou Wenhan made an announcement stating that, during the period that the VAT reform is being implemented, the preferential tax policy will in principal remain valid, and that transitional measures will be taken for certain industries in order to equally reduce the tax burden of all industries to be affected. Research will be conducted on tax support policies, and restrictions of investment into new and high tech enterprises will be loosened.

Work Report on Development of Laws Announced by NPC Standing Committee

On 9 March, Chairman of the National People’s Congress (NPC) Standing Committee Zheng Dejiang delivered the committee’s work report. It promises to quicken the pace of formulating a complete system of laws & regulations. It also pledges to develop laws affecting environmental protection, ship tonnage tax, tobacco tax, food, asset appraisal and revise security and small-to-medium sized enterprise promotion laws.


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