CMS, China | Chinese Tax Regulation Update | October 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?
Announcement [2020] No. 40 jointly released by the Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”) 2020-09-29 2020-09-29 Miscellaneous VAT policies on transfer of stocks for free, small loans and compensation for land expropriation The Announcement clarifies the VAT policies on the following subjects:

When a taxpayer transfers stocks for free, the transferor shall treat the selling price for VAT purposes the same as the buying price. When the transferee further transfers the above-mentioned stocks again, the buying price shall be treated as the same as the transferor’s “selling price” for VAT purposes. The tax item of "transfer of financial instruments” applies.
From August 20, 2019, financial institutions are entitled to VAT exemption policy for the interest incomes derived from small loans, with a term of no less than one year but no more than five years, issued to small- and micro-sized enterprises as well as the individual businesses through selecting the loan prime rate applicable to either the one-year loans or the loans with a term over five years.
The fees paid by land owners for compensating the loss of land use rights, the relevant movable and immovable properties due to land expropriation shall fall within the VAT-exempted situation where “the land user returns the land use right to the land owner”.
SAT Announcement [2020] No. 16 2020-09-29 2020-11-01 VAT and Consumption Tax (“CT”) exemption on sales of outbound duty-free commodities by outbound duty-free shops in Hainan This Announcement provides administrative measures on the outbound duty-free shops which sell outbound duty-free commodities in Hainan and enjoy the VAT and CT exemption policies. The key points that are worth attention of the Announcement mainly include the following:

Outbound duty-free shops shall declare VAT and CT on a monthly basis and provide accurate and complete information regarding the sales of the outbound duty-free commodities.

When declaring the taxes for the first time, the outbound duty-free shop shall submit the description of the shop’s basic information and the approval documents issued by the authorities for establishment of the outbound duty-free shop. If any above information has changed, the outbound duty-free shop shall report the changes to the tax authorities within the tax filing period in the following month. Any revocation or expiration of outbound duty-free shop status shall also be reported to the tax authorities within 15 days after the revocation or expiration.
Sales of non-outbound duty-free commodities shall still be subject to VAT and CT. If an outbound duty-free shop concurrently sells non-duty-free commodities, it shall separately calculate the sales volume of the outbound duty-free commodities and the non-duty-free commodities. Failing to separate the calculation will give rise to taxation on the sales of all commodities. Meanwhile, only normal VAT invoices can be issued by the outbound duty-free shops in Hainan when they sell the outbound duty-free commodities.

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
“CMS, China” should be understood to mean the representative offices in Mainland China of CMS Cameron McKenna Nabarro Olswang LLP, CMS Francis Lefebvre Avocats and CMS Hasche Sigle, working together. CMS, China is a member of CMS Legal Services EEIG, a European Economic Interest Grouping that coordinates an organisation of independent member firms. CMS Legal Services EEIG provides no client services. Such services are solely provided by the member firms in their respective jurisdictions.   Disclaimer   Privacy Statement

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