China Tax Newsletter. May 2014

Transcription

1 BDO China Shu Lun Pan Certified Public Accountants LLP LIXIN Certified Tax Agents Co., Ltd China Tax Newsletter Our tax newsletter for this month covers: 1. Time Limit Extends for Applying for the Deferment of Export Tax Refund (Exemption) Declaration Small Low-Profit Enterprises Subject to Assessment-based Tax Collection Are Also Eligible for Enterprise Income Tax Preferential Policies SAT Released the Standards for Determining the Beneficial Owner under the Entrusted Investment Individual Income Tax Policies for Self-employed People Whose Actual Operation Period Is Shorter than One Year Extension and Refinement of the Tax Policies in Favor of Starting a Business or Promoting Employment The Telecom Industry Was Included in the Pilot Scheme of Switching from Business Tax to Value-added Tax from 1 June Assets Received by an Enterprise from Shareholder Allocation Are Exempt from Enterprise Income Tax If They Are Deemed to be Capital Stamp Duty Policies for Securities Transactions Relating to Transfer of Preferred Stocks Leasing Enterprises Are Entitled to a Reduced VAT Rate of 5% for the Import of Aircrafts The Shenzhen Municipal Office, SAT Will Not Imposed Penalties on Part of Taxpayers Violation Actions As of June 1 If Taxpayers Conduct Them for the First Time...3

2 1. Time Limit Extends for Applying for the Deferment of Export Tax Refund (Exemption) Declaration Pursuant to the Announcement of the State Administration of Taxation [2013] No. 12, if enterprises fail to declare the export tax refund (exemption) when it cannot collect all the required documentation within the stipulated period due to force majeure events such as natural disasters and public emergencies, they shall make an application to the competent tax authorities before the cut-off date for tax refund (exemption) declaration. Recently, the preceding application time limit is extended pursuant to the State Administration of Taxation [2014] No. 20, i.e. enterprises can apply for the deferment of export tax refund (exemption) declaration before 30 June 2014 for goods exported before 31 December Small Low-Profit Enterprises Subject to Assessment-based Tax Collection Are Also Eligible for Enterprise Income Tax Preferential Policies Pursuant to Cai Shui [2009] No. 69, only enterprises subject to audit-based tax collection are eligible for income tax preferential policies for small low-profit enterprises. However, pursuant to the Announcement of the State Administration of Taxation [2014] No. 23 that is released recently, enterprises subject to assessment-based tax collection that meet the criteria of small low-profit enterprises are also eligible for the preferential policies. (1) The tax preferential policies for small low-profit enterprises include the reduced tax rate incentive (the collection of enterprise income tax at a reduced rate of 20%) and tax reduction by half (50% reduction on the taxable income for enterprises whose taxable income is below RMB100,000). (2) Approval from the competent tax authorities is not required, but small low-profit enterprises shall file the information about their employees and total assets with the tax authorities for record at the time of enterprise income tax final settlement. (3) The qualified small low-profit enterprises can apply the preferential policies at the time of prepayment and it can calculate the tax preferences at the time of annual final settlement. 3. SAT Released the Standards for Determining the Beneficial Owner under the Entrusted Investment Recently, the State Administration of Taxation (SAT) released the Announcement of the State Administration of Taxation [2014] No. 24, in which it clearly defines what is entrusted investment, what materials should be handed in if a non-resident engaged in entrusted investment wants to apply for the entitlement to treatment under tax treaties, and standards upon which the competent tax authorities determine whether a non-resident is a beneficial owner according to the income type. Taxpayers entitled to the treatments of dividends, interest, and royalties specified in the tax treaties must satisfy the following requirements: The taxpayer is the tax resident of the other contracting state as well as the beneficial owner of the dividends, interest, and royalties. 1

3 4. Individual Income Tax Policies for Self-employed People Whose Actual Operation Period Is Shorter than One Year Recently, the State of Administration of Taxation (SAT) released the Announcement of the State Administration of Taxation on Issues Concerning Individual Income Tax for Self-employed People, Sole Proprietorships and Partnerships. The circular clearly specifies the tax computation method for self-employed persons whose actual operation period is shorter than 1 year: the individual income tax on the income derived from production and business operation shall be computed on the basis that the actual operation period is 1 year. The criteria for deduction of the expenses of an investor itself shall be 3,500 per month based on the number of its actual operation months. 5. Extension and Refinement of the Tax Policies in Favor of Starting a Business or Promoting Employment Tax preferential policies specified in Cai Shui [2010] No. 84 for supporting and promoting employment expired on 31 December The recently released Cai Shui [2014] No. 39 and Cai Shui [2014] No. 42 extend the validity period of the preceding policies to 31 December At the same time, the policies are refined to provide greater support to employment promotion: (1) The scope of unemployed person whose employment makes the enterprises eligible for the tax preferential policies is adjusted. Originally, enterprises are eligible for the tax preferential policies if they provide jobs to the specified four types of unemployed persons. Now enterprises providing jobs to unemployed persons registered with a public employment service agency for a year or longer are eligible for the policies; (2) The restriction on the scope of industries eligible for the tax preferential policies is repealed; (3) The scope of taxes to be deducted is enlarged, i.e. the local education surcharges are eligible for tax deduction; (4) The upper limit of tax deduction is raised. Local governments can grant greater tax incentives to self-employed persons or enterprises that provide jobs to unemployed persons specified in the circular pursuant to related regulations in addition to the rated tax deduction by the national government; (5) Related procedures are simplified. For the management of tax preferential policies, filing is required instead of approval; (6) The preceding principles also apply for employment of discharged soldiers. 6. The Telecom Industry Was Included in the Pilot Scheme of Switching from Business Tax to Value-added Tax from 1 June 2014 The telecom industry is applicable to two tax rates after it is included in the pilot scheme of switching from business tax to value-added tax. The tax rate for basic telecom services is 11% and that for value-added services is 6%. 7. Assets Received by an Enterprise from Shareholder Allocation Are Exempt from Enterprise Income Tax If They Are Deemed to be Capital Assets received by an enterprise from shareholder allocation shall not be included in the taxable income of the enterprise if they satisfy the following requirements: 2

4 (1) The assets shall be deemed capital (including additional paid-in capital) as agreed upon in the relevant contract or agreement; (2) They have been accounted in real terms. Assets not satisfying the preceding requirements will be deemed donations and shall be subject to enterprise income tax. The preceding regulation shall apply to the final settlement of enterprise income tax in the year of 2013 and thereafter. It shall also apply to the assets received by an enterprise from shareholder allocation before 2013 which have not been subject to the enterprise income tax treatment. However, the enterprise shall complete the documents and formalities before 31 December 2014; otherwise, the assets will be treated as taxable income which will be subject to the enterprise income tax. 8. Stamp Duty Policies for Securities Transactions Relating to Transfer of Preferred Stocks Pursuant to Cai Shui [2014] No. 46, the transferor shall compute and pay stamp duty on securities (stocks) transactions at the tax rate of 1% based on the actual amount of the transaction stated in the legal instrument when transferring preferred stocks. 9. Leasing Enterprises Are Entitled to a Reduced VAT Rate of 5% for the Import of Aircrafts As of 1 January 2014, a leasing enterprise that imports an aircraft under general trade account and leases the aircraft to a domestic airline is also entitled to the preferential tax policies for domestic airlines that import aircrafts. That is, a reduced VAT rate of 5% is imposed on the import of an aircraft with an empty weight of more than 25 tons. 10. The Shenzhen Municipal Office, SAT Will Not Imposed Penalties on Part of Taxpayers Violation Actions As of June 1 If Taxpayers Conduct Them for the First Time Pursuant to the Announcement of the Shenzhen Municipal Office, SAT [2014] No. 3, competent tax authorities will order taxpayers to make corrections within the specified period of time instead of imposing penalties if taxpayers involve in the following violation actions for the first time and under minor circumstances: (1) Registration of change is not conducted within the specified period of time; (2) Tax returns are not lodged within the specified period of time; (3) Invoices are not issued within the specified issuance time limit and according to the sequence and column filling requirements, and all copies of an invoice are not issued at the same time; (4) Invoices are not sealed with the invoice special seal; (5) Invoices are lost. 3

5 The Newsletter is published for the clients of BDO China Shu Lun Pan Certified Public Accountants LLP and LIXIN Certified Tax Agents Co., Ltd. The contents are for reference only which should be kept confidential. Although we try to ensure the accuracy, please note that the content is just the extract of related documents with our brief unbiased comments, thus detailed information should be referred to the full regulation mentioned when in practice. Readers are advised to consult tax advisors before acting on any information in this newsletter. For more information or advice on the above subjects or other tax issues, please contact: Jesse Wang Tel: Jinsong Hu Tel: Robert Pedersen Partner, International Tax Services Tel: To ensure compliance with US Treasury Department regulations, we wish to inform you that any tax advice that may be contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the US Internal Revenue Code or applicable state or local tax law provisions or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. BDO International is a worldwide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity in its own country. The network is coordinated by BDO Global Coordination B.V., incorporated in The Netherlands, with its statutory seat in Eindhoven (trade register registration number ) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. 4