Chinese tax regulations worth noting

January 28, 2021

Director International Business CEO
Brighture, China

The Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued the Notice on Preferential Tax Policies for Imported Exhibits Sold during the China International Import Expo (CIIE) (CAIGUANSHUI [2020] No. 38). With effect from 12 October 2020:

  • Import duties, import VAT and excise are exempted for import exhibits sold in reasonable quantities during the fair. However, such tax relief shall not cover goods prohibited by the state from importation.
  • For the exhibits sold within the exhibition period in excess of the quantity or quota as stipulated, and the exhibits not sold within the exhibition period and not returned abroad after the exhibition, taxes shall be levied subject to the regulations of the state.
  • The List of Exhibitors and the List of Exhibits Sold during the Expo shall be submitted exclusively to Shanghai Customs by the organiser, namely China International Import Expo Bureau and the National Convention and Exhibition Center (Shanghai) Co., Ltd.

In accordance with the reform and deployment of the collection system for social insurance premium by the State Council and the People’s Government of Shandong Province, Qingdao Taxation Bureau, Qingdao Finance Bureau, Qingdao Human Resources and Social Security Bureau and Qingdao Medical Security Bureau jointly issued the Circular on the Collection by Tax Authorities of Corporate Social Insurance Premium ([2020] No. 4), which stipulates that, effective from 1 November 2020, all social insurance premiums of enterprise employees will be collected exclusively by tax authorities.

  • Scope: Basic pension and medical insurance premiums (including maternity insurance), work-related injury insurance premiums and unemployment insurance premiums for employees paid by employers; basic pension and medical insurance premiums paid by individual industrial and commercial enterprises that do not have employees, non-full-time employees who do not participate in the employer’s basic pension and medical insurance schemes, and basic pension and medical insurances paid by other workers on flexible engagements.
  • Mode and period of payment: Payers shall, in accordance with the current methods and channels, register with the social security (medical insurance) agency for participating in the insurance and personnel changes and declare the premium payable, and make payment to the tax authorities as per the amount ratified by the social security (medical insurance) agency. In case of an enterprise, payment for the current month should be made before the end of the month; in case of a worker on flexible engagement, the amount payable should be paid into the designated bank account before the 20th of each month.

To deepen the reform of ‘power delegation, management and service’ and enhance the business environment, 13 governmental departments (including the State Administration of Taxation) jointly issued the Notice on Measures to Promote Tax Payment Facilitation and Improve Taxation and Business Environment (SAT [2020] No. 48), which provides that electronic invoice reform shall be implemented step by step:

  • Effective from December 21, 2020, the electronic VAT special invoice will be applicable to newly registered taxpayers in 11 districts including Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Anhui, Guangdong, Chongqing, Sichuan, Ningbo and Shenzhen, with drawees nationwide. Meanwhile, the scope of drawees of electronic VAT special invoices issued by taxpayers who are already covered by the pilot implementation in Ningbo, Shijiazhuang and Hangzhou, are expanded to the whole country.
  • Effective from January 21, 2021, the electronic VAT special invoice will be applicable to newly registered taxpayers in 25 districts including Beijing, Shanxi, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangxi, Hainan, Guizhou, Yunnan, Xizang, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Dalian, Xiamen and Qingdao, with drawees nationwide.
  • Upon the implementation of the electronic VAT special invoices in various regions, where local newly registered taxpayers need to issue paper general invoice, electronic general invoice, paper VAT invoice, electronic VAT invoice, paper motor vehicle unified invoice and paper second-hand motor vehicle unified invoice, they can receive the tax UKey to issue the invoices. On the other hand, tax authorities will issue tax UKeys free of charge to newly registered taxpayers, and provide free electronic VAT special invoice issuing services for taxpayers relying on the public service platform of VAT electronic invoices.

There will be efforts to build a national electronic invoice service platform and tax network trusted identity system by the end of 2021, and to establish a management/service mode matching the electronic invoice, so as to facilitate the use of invoices by market entities and promote the construction of smart taxation.