On March, 27, 2009, China’s Ministry of Finance (“MOF”), State Administration of Taxation (“SAT”) and General Administration of Customs jointly issued Notice of Some Issues related to Taxation Policies on Supporting the Development of Cultural Enterprises (the "Notice"). The Notice extends a series of tax benefits for cultural and media enterprises through December 31, 2013.
Continue Reading...On April 30, 2009 the PRC Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”) jointly issued Notice of Some Issues Associated with Income Tax Treatment of Enterprise Restructuring (Cai Shui [2009] No. 59) (“Notice 59”) relating to China's tax treatment of certain corporate restructuring transactions. The rules introduced in Notice 59 have retroactive effect to January 1, 2008.
Continue Reading...New tax rules relating to the tax treatment of certain corporate restructuring transactions are expected to be finalized soon by the PRC Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”).
Under China’s pre-2008 foreign enterprise income tax (“FEIT”) regime, the SAT issued guidance on the tax treatment of corporate restructuring transactions, including Guo Shui Fa [1997]. No 71 (“Circular 71”) and Guo Shui Han Fa [1997].No 207 (“Notice 207”). Circular 71 provided detailed guidelines on the tax treatment of corporate restructuring transactions, including mergers, spin-offs, asset transfers and share restructurings. Notice 207 confirmed that a foreign investor could transfer its equity interest in a Chinese enterprise to a 100% related enterprise at cost, provided a commercial-purpose test could be satisfied. The guidance provided in Circular 71 and Notice 207 was interpreted by many foreign investors as indicating preferential tax policies under the FEIT regime.
Online games are big business in China and they're only getting bigger. The China Annual Game Industry Report 2007 underlines the explosive growth in this industry. As of 2007, the online game user population reached 40,170,000 and has rapidly expanded since then. As the market for online games has increased, so too has the market for virtual property trading. According to The Seventh China Online Game Survey 2007, 83.7% of the users traded items for cash, 46.8% of the users hired third parties to obtain virtual properties on their behalf. These activities amounted to an estimated 4 billion in RMB in 2007.
Continue Reading...A recent agreement by the People's Bank of China ("PBC") has expanded a critical process for conducting business in China: currency settlement. On March 12, 2009, the PBC declared a foreign exchange payment arrangement (hereinafter referred as to the “Arrangement”) between mainland China and Hong Kong in conformity with the Memorandum of Foreign Exchange Payment Arrangement between achieved by the PBC and the Hong Kong Monetary Authority (“HKMA”). The Arrangement was executed on March 16, 2009.
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