CMS, China | Chinese Tax Regulation Update | August 2020

CMS, China

Dear Sir or Madam,

Please find enclosed our update on the latest developments on Chinese Tax Law.

Kind regards,
CMS, China

Topic What is new?
SAT Announcement [2020] No. 13 2020-07-28 2020-07-01 Improvement and adjustment of withholding methods of Individual Income Tax (“IIT”) for certain taxpayers This Announcement has alleviated the tax burden of newly employed individual taxpayers in the course of interim tax filings within a tax year. The key points that are worth attention of the Announcement mainly include the following:

For a PRC tax resident individual who obtains wages and salary incomes for the first time in a tax year, when the withholding agent withholds and prepays IIT for him / her in a certain tax year, the accumulated pre-tax deduction amount can be RMB 5,000 times the number of months counted from January of the year till the tax month. If the individual has already obtained wages and salary incomes from other employers during the current tax year, for example, before joining the current company which now needs to withhold IIT for him / her for the first time, the treatment above does not apply and only RMB 5,000 is available as the pre-tax deduction.
For a student who receives full-time academic education and obtains remunerations for labour services due to internship, the withholding agent may calculate, withhold and prepay IIT for him / her based on the “cumulative withholding method” applicable to salary incomes, as opposed to the provisional withholding method applicable to normal independent service incomes.
Announcement [2020] No. 36 jointly released by the Ministry of Finance (“MOF”), the State Administration of Taxation (“SAT”) and the General Administration of Customs (“GAC”) 2020-08-05 2020-08-05 Re-activation of potential import tax relief of 20 commodities This Announcement reactivates the potential import tax relief of 20 commodities, regardless into whichever regions they are imported, by whichever enterprises / entities / individuals they are imported and via whatever modes of trade they are imported.

The 20 commodities, mentioned in the circular Guofa [1994] No. 64, are television sets, video cameras, video recorders, video players, acoustic equipment, air conditioners, refrigerators and freezers, washing machines, cameras, copiers, program-controlled telephone exchanges, microcomputers and peripherals, telephones, wireless paging systems, fax machines, electronic calculators, typewriters and word processors, furniture, lamps, meal ingredients (i.e., condiments, meat, poultry, eggs and vegetables, aquatic products, fruits, beverages, wine and dairy products).
Caishui [2020] No. 38, jointly released by the MOF and the SAT 2020-07-13 2020-01-01 Corporate Income Tax (“CIT”) policies for enterprises of key industries at Lingang New Area of China (Shanghai) Pilot Free Trade Zone This Circular has provided preferential CIT policies for eligible enterprises in the Lingang New Area of China (Shanghai) Pilot Free Trade Zone. The key points that are worth attention of the Circular mainly include the following:

The eligible enterprises can enjoy a reduced CIT rate of 15% in the following five years from the date of establishment. The eligible enterprises shall be legal entities that produce or develop integrated circuits, artificial intelligence, biomedical drugs and civil aviation components and carry out substantive production or R&D activities.
In order to qualify for the preferential tax policies, enterprises shall be incorporated at the Lingang New Area from January 1, 2020 (excluding those enterprises relocated inbound) and manufacture key products, which are indispensable in such key fields as integrated circuit, artificial intelligence, bio-medicine and civil aviation.
Eligible enterprises shall also follow certain conditions in the aspects of investors, R&D and production.
The Shanghai municipal finance and taxation authorities shall, in conjunction with the authorities in charge of relevant industries, formulate specific implementational measures for the recognition of enterprises in key industries and shall file the measures with the MOF and SAT for record.

This information is provided for general information purposes only and does not constitute legal or professional advice.  Copyright by CMS, China.

For further information, please contact:

Gilbert Shen
Head of Tax Practice Area Group
CMS, China
+86 21 6289 6363

+86 21 6289 0731


This information is provided for general information purposes only and does not constitute legal or professional advice. Copyright by CMS, China.

CMS, China
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