On November 19, 2008, China’s Ministries of Commerce, Foreign Affairs, Public Security and Justice jointly issued a Guideline on Cross-border Investigation and Litigation of Fugitive Foreign Investors (hereinafter referred as to the “Guideline”).
In January 2009, China's State Administration of Industry and Commerce issued the Rules on the Registration of Share Investment as Capital Contribution ("Rules"), which will go into effect on March 1, 2009. "Share investment as contributions to capital" means the investment of a company through an investor's shares of another company. The Rules will facilitate the share investment and improve the efficiency of its use.
On January 1, 2009, China abolished the Interim Regulations on Urban Real Estate Tax. Under those regulations, the Urban Real Estate Tax had been levied on real property purchased in China by: 1) Chinese enterprises with foreign investments; 2) foreign enterprises; or 3) foreign individuals (all three collectively referred to below as "Foreign Investors"). As a result of this change, Foreign Investors who purchase real property after January 1, 2009, are now subject to China's Interim Regulations on Real Property Tax (i.e., the same regime applicable to domestic Chinese owners of real estate).
Most maritime shipping companies were operating profitably through the summer of 2008 until the "perfect storm" of the credit crisis and the worldwide recession struck, leading to the collapse of both the commodity and freight markets. The resulting upheaval has affected trade credits, shipbuilding deliveries, orders, chartering, and sales-and-purchases, among other things, for shipping companies worldwide. Reports of bankruptcy, insolvency, liquidation and complex debt restructurings of shipping and other maritime industry companies have begun surfacing in the trade press, with more to come.
As a result of the turmoil in the shipping industry, actions seeking attachments under Supplemental Admiralty Rule B of the Federal Rules of Civil Procedure have risen dramatically, further exacerbating the problems facing cash-strapped shipping companies. As the recent U.S. bankruptcy filings of Armada (Singapore) Pte. Ltd. and Atlas Shipping A/S demonstrate, Chapter 15 bankruptcy proceedings under the U.S. Bankruptcy Code may provide struggling shipping companies with a powerful tool for protecting their assets from Rule B Attachments.
Implementing Regulations Relating to PRC Business Tax
In China, a 5% "business tax" is imposed on the gross amount received for certain services and the transfer of certain intangible and immovable properties. On December 25, 2008, the Ministry of Finance of the People’s Republic of China (“MOF”) and the State Administration of Taxation of People’s Republic of China (“SAT”) jointly issued the Implementation Rules of the Provisional Regulations of the PRC on Business Tax (“BT Rules”). The BT Rules became effective on January 1, 2009.
While the BT Rules revised the previous regulations issued in 1993 in a number of respects, the major changes include (i) broadening the definition of taxable Chinese services; and (ii) the coordination of the BT Rules with the new Implementation Rules for Provisional Regulations of the PRC on Value-added Tax (“VAT Rules”).
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