CMS, China | Chinese Tax Regulation Update | November 2020





CMS, China

Dear Sir or Madam,

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

Kind regards,
CMS, China

Circular
Number
Issuance
Date
Effective
Date
Topic What is new?
Announcement [2020] No. 42 jointly released by the Ministry of Finance (“MOF”), the State Administration of Taxation (“SAT”) and the General Administration of Customs (“GAC”) 2020-11-11 2020-12-01 "Zero Tariff" policy on raw and auxiliary materials imported into the Hainan Free Trade Port The Announcement clarifies the "zero tariff" policy on raw and auxiliary materials imported into the Hainan Free Trade Port (“FTP”). The key points that are worth attention of the Announcement mainly include the following:

Before the whole island of Hainan is subject to independent customs administration (expected to be conducted before 2025), raw and auxiliary materials imported by enterprises registered in the Hainan FTP with independent legal person status for self-use in production activities, or consumed in production and processing activities or service trades where both the suppliers of the materials and the customers are out of the Chinese customs jurisdiction will be exempted from import duty, import VAT and consumption tax.
   
The raw and auxiliary materials qualified for the "zero tariff" policy are subject to administration under a positive list promulgated by the MOF together with other relevant authorities. The first batch of raw and auxiliary materials subject to "zero tariff" cover a total of 169 commodities under eight-digit HS codes, including coconut and other agricultural products, coal and other resource products, xylene and other chemicals, optical fiber preforms, and other kinds of raw and auxiliary materials, as well as repair parts for airplanes, other aircrafts and vessels. The list shall be dynamically adjusted based on Hainan's actual needs and regulatory conditions. The parts and components in the positive list shall be used in repair of aircrafts and vessels (1) which are imported for repair and will be re-exported upon repair or (2) which are operated by airline companies whose main bases are in Hainan or (3) which are operated by shipping companies registered in Hainan with legal person status and whose ports of registry are in Hainan.
   
Raw and auxiliary materials subject to "zero tariff" can only be used for production by the enterprises in the Hainan FTP. The materials cannot be transferred within the Hainan FTP or leave the Hainan FTP unless the approvals from the Customs office are obtained and the relevant import taxes have been made up.

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
Counsel
Head of Tax Practice Area Group
CMS, China
T
+86 21 6289 6363

F
+86 21 6289 0731
E
gilbert.shen@cmslegal.cn

 


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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