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Juha Lassila

New Regulations for Resident Representative Offices in China | Regulatory Updates - Dez... - 0 views

  • Representative offices cannot employ in excess of four foreign staff, including the chief representative.
  • representative offices will not be permitted to apply for tax exemption
  • representative offices may also not engage in any profitable activities
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  • If you require your China operations to directly buy and sell, have its own import/export license, and legitimately trade in China – you will need to change your current RO structure to that of a foreign invested commercial enterprise (FICE) or wholly foreign owned enterprise (WFOE)
  • 2. ROs are now more expensive to operate than a FICE or WFOE
  • foreign invested commercial enterprises (FICE) These are typically used for the following business activities: • Import-export and distribution • Retailing: selling goods and related services to individuals from a fixed location, in addition to TV, telephone, mail order, internet and vending machines, • Wholesaling: selling goods and related services to companies and industry, trade or other organizations • Agencies, brokerages: representative transactions on the basis of provisions • Franchising Use of wholly foreign owned enterprises (WFOE) in the services industry • Consulting, other professional services • Quality control, after sales services, product design, technical support, sampling (although minimum amount permitted)
  • WFOEs may also be used for manufacturing.
  • the establishment of both a FICE and a WFOE are rather more complex than an RO
  • The structuring and application of the new FICE/WFOE can be combined at the same time as the RO closure.
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    Hmmm... If FICE/WFOE are more complex to setup then what about FIPs - Foreign Invested Partnersips?
Juha Lassila

China liberalizes foreign investment in medical services sector - Lexology - 0 views

  • foreign-invested medical institutions ("FIMIs")
  • Foreign investors may choose to establish a for-profit or not-for-profit medical institution.
  • For-profit FIMIs will have autonomy in determining the pricing of their services. They will need to pay enterprise income tax on net profits, but not business tax (a turnover tax on, amongst others, certain services and generally applicable to business enterprises in China charged at various rates on gross sales depending on the nature of the underlying service).
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  • for-profit medical institutions would be able to benefit from an exemption on property tax and urban land use tax on its property and land for self-use, and land-based vehicle and watergoing vessel use taxes on its land-based vehicles and watergoing vessels for self-use for a period of three years. Further tax breaks, including a three-year exemption for valued added tax on medical preparations that are made and used by the for-profit FIMI, may also apply[3].
  • From a government procurement perspective, all levels of PRC governmental authorities are now encouraged to purchase public heath services from private medical institutions.
  •  Qualification requirements for setting up an FIMI
  • The total investment amount must no less than RMB 20 million (roughly US$ 3 million or EUR 2.27 million);
Juha Lassila

China unifies city maintenance and construction tax and education surcharge for domesti... - 0 views

  • In China, City Maintenance and Construction Tax is levied on transactions subject to VAT, Business Tax, and Consumption Tax. The tax base is the amount of VAT, Business Tax, and Consumption Tax paid. Tax rates are 7 percent for taxpayers in urban districts of cities, 5 percent for taxpayers in towns, and 1 percent for taxpayers in other areas.
  • This tax unification will increase the tax burden on operations and investment in China by foreign companies.
  • VAT payers who pay VAT at the regular rate of 17 percent of the sales price will need to pay an additional 1.7 percent of the sales price as City Maintenance and Construction Tax and Education Surcharge
Juha Lassila

Foreign Invested Partnership - Presentation by Dezan Shira - 0 views

  •  
    FIP-Presentation-2010.pdf (application/pdf Object)
Juha Lassila

Ground breaking rules governing online games - Lexology - 0 views

  • Foreign companies are still not allowed to invest in online game business in China.
Juha Lassila

New rules on the litigation of cases involving foreign investment enterprises - Lexology - 0 views

  • The Provisions deal mainly with cases involving such FIEs as contractual joint ventures, equity joint ventures and wholly foreign owned enterprises
Juha Lassila

Law on laws governing civil relations involving foreign elements - Lexology - 0 views

  • The Law covers civil and commercial relationships involving foreign natural persons and legal persons in a number of fields, including marriage, inheritance, property rights, general contractual obligations, labour law, tort and intellectual property rights. The Law clarifies the rules on the applicable laws governing civil disputes in several areas where PRC laws are currently silent, including acts of agency, trusts, arbitration, pledges of rights, labour contracts, and product liability.
  • In addition, the Law expands to tort and property rights in movables the scope of areas where, in the context of a so-called foreign-related contract ("涉外合同"), the parties are free to choose their own governing law.
  • The current PRC laws require that several types of contracts which relate to foreign investment in China such as Sino-foreign equity joint venture contracts, contracts for purchase of equity interests or assets of a domestic enterprise by foreign investors[6] must be governed by PRC Law.
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  • The Law also states that where the parties have chosen a foreign governing law, the court or the arbitration tribunal should investigate and determine the applicable foreign laws, presumably through expert testimony (as in the past). Where the parties select foreign governing laws by agreement, it is the parties' responsibility to provide copies of the selected foreign governing law
  • This means that, for example, all shareholder agreements in relation to say a two-party wholly foreign-owned enterprise would have to be governed by PRC law.
  • In particular, the Law stipulates two important general principles for determining the application of governing laws for foreign-related civil disputes: party autonomy and closest connection
  • However, the Law is not designed to radically change the current rules of conflicts of laws in China. The requirements to apply mandatory Chinese laws which are provided by other laws are maintained under the Law
  • The rules of conflicts of laws stipulated under other civil or commercial laws, which are not covered by the Law, also remain unchanged.
Juha Lassila

China imposes additional tax burden on foreign enterprise, foreign invested enterprises... - 0 views

  • City Maintenance and Construction Tax (“CMCT”)
  • Education Surcharge
  • Each surcharge is calculated as a percentage of the actual amount of the VAT, CT and BT paid by the taxpayers.
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  • Education Surcharge is calculated at 3% of the VAT, CT and BT payments.
  • If the tax payer (or the tax withholding agent in case of a foreign enterprise) is located in an urban area, the rate is 7% of the VAT, CT and BT payments;
Juha Lassila

China imposes tougher tax rules and administrative restrictions on Representative Offic... - 0 views

  • On February 20, 2010, the State Administration of Taxation (SAT) issued the “Measures for the Administration of Taxation on Representative Offices of Foreign Enterprises” (Guo Shui Fa [2010] No. 18)
  • a) Increased Deemed Profit Rate
  • The Actual Profit Method is subject to the ability of the Rep Office to properly record its operations in its financial accounting books and accurately calculate its taxable income and profit through proper reflection of the actual functions it performs and risks assumed and then report returns based on such records to the tax authorities on a quarterly basis.
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  • , if a Rep Office is unable to maintain complete accounting books, or cannot accurately calculate its returns or costs, the Rep Office will be taxed according to the Deemed Profit Method, which is based on the Rep Office’s costs or revenue. The selection will depend upon which amount can be more accurately illustrated by the Rep Office. The tax authority will designate a deemed profit rate to the Rep Office and calculate the taxable income based on such deemed profit rate.
  • he minimum deemed profit rate under the Deemed Profit Method was increased from 10 to 15 percent
  • c) Liability for Rep Offices to pay Value-Added Tax (VAT)
  • b) Abolishment of Tax Exemption
  • a foreign company which seeks to set up a Rep Office must show that the foreign company has been set up at least for two years.
  • n the case of a renewal the applicant will need to prove that the foreign company still exists. Further a limitation has been introduced as to the term of new and renewed Rep Office licenses for one year at a time (compared to the usual three years).
  • a maximum of four representatives, including the chief representative, are generally allowed in a Rep Office.
Juha Lassila

China M&A: Assembling an Effective Team for a China Transaction Part II : China Law Ins... - 0 views

  • Medium-sized companies will often need external support for their China projects, and there are so many consultants to choose from in a myriad variety of types and sizes.
  • The China Consultant — Jack of all Trades
Juha Lassila

China's 12th Five Year Plan: A Preliminary Look, Part II : China Law Blog : China Law f... - 0 views

  • key targets of the draft
  • Increased domestic consumption
  • Minimum wage standard to increase by no less than 13 percent on average each year
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  • CCTV said there will be a cut back on rail and road investment over the next 10 years in comparison to the previous 10 (doesn't take a rocket science to know that most of the R&D budget was spent during the previous 10 years)
Juha Lassila

China's 12th Five Year Plan: A Preliminary Look : China Law Blog : China Law for Business - 0 views

  • Resource constraints: energy and raw materials. Mismatch in investment and imbalance in consumption. Income disparity. Weakness in capacity for domestic innovation. Production structure is not rational: too much heavy industry, not enough service. Agriculture foundation is thin and weak. Urban/rural development is not coordinated. Employment system is imbalanced. Social contradictions are progressively more apparent. Obstacles to scientific development continue to exist and are difficult to remove.
  • Most planners are pushing for tripling of the average wage for factory workers during this 5 year plan
Juha Lassila

Why Nouriel Roubini Is Wrong on China's Economy - CNBC - 0 views

  • Respondents under 32 years old had effective savings rates of zero
  • Respondents under 32 years old had effective savings rates of zero.
  • Consumer finance reforms are also spurring more consumption
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  • More than 80 percent of the 18 million auto sales there last year were paid 100 percent up front
  • fixed investment share of GDP of 47 percent is too high
  • the increase is a short-term stimulus to offset lowered exports due to the world’s malaise
  • Beijing’s municipal authorities even announced multinationals should have minimum wages 1.5 times that of local firms
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