JC Master Legal News Issue 802

Key Takeaways for This Issue
Notice of the People’s Bank of China on the Issuance of the “Regulations on Barcode Payment Business (Trial)”
On December 27, 2017, the People’s Bank of China issued the “Regulations on Barcode Payment Services (Trial),” adopting five major measures to address various irregularities in payment practices.
The National Development and Reform Commission has issued the Measures for the Administration of Overseas Investment by Enterprises.
On December 26, 2017, the National Development and Reform Commission issued the Measures for the Administration of Overseas Investment by Enterprises. The new measures will take effect on March 1, 2018, at which time the Measures for the Approval and Filing of Overseas Investment Projects (Order No. 9 of the National Development and Reform Commission, hereinafter referred to as “Order No. 9”) will be repealed concurrently.
The State Council has promulgated the Regulations for the Implementation of the Environmental Protection Tax Law of the People’s Republic of China.
On December 25, 2017, Premier Li Keqiang of the State Council signed a State Council decree promulgating the Regulations for the Implementation of the Environmental Protection Tax Law of the People’s Republic of China, which entered into force on January 1, 2018. Within the framework of the Environmental Protection Tax Law, these implementing regulations provide detailed provisions on taxable objects, tax bases, tax exemptions and reductions, as well as tax collection and administration, thereby better meeting the practical needs of environmental protection tax collection.
The Standing Committee of the National People’s Congress promulgated the Law of the People’s Republic of China on Tendering and Bidding.
On December 28, 2017, the revised Law on Tendering and Bidding came into effect. The principal changes are as follows: 1. Paragraph 3 of Article 13, paragraph 2, has been deleted. 2. Paragraph 1 of Article 14 has been deleted. 3. In paragraph 1 of Article 50, the phrase “in cases of serious violations, suspend or revoke the tendering agency’s qualification” has been amended to read: “in cases of serious violations, prohibit the entity from acting as an agent for projects required by law to undergo tendering for a period of one to two years, with public announcement, and, in severe cases, revoke its business license through the administrative department for industry and commerce.”
President Xi Jinping delivered his 2018 New Year message.
On December 31, 2017, President Xi Jinping delivered his 2018 New Year message, stating that serving the people is the greatest achievement of governance.

Table of Contents
Table of Contents

Finance & Capital Markets
Notice of the People’s Bank of China on the Issuance of the “Regulations on Barcode Payment Business (Trial)”
The People’s Bank of China and the China Securities Regulatory Commission have jointly issued the “Interim Guidelines on Green Bond Evaluation and Certification Practices.”
The China Banking Regulatory Commission has issued the “Administrative Measures on Capital Management for Financial Asset Management Companies (Trial).”
The China Securities Regulatory Commission is soliciting public comments on the “Opinions on Further Regulating the Engagement of Third-Party Institutions and Related Practices by Securities Offices in Investment Banking Activities (Draft for Comments).”
Revision of the Guidelines on the Content and Format of Listed Companies’ Periodic Reports: Strengthening Disclosure of Environmental and Social Responsibility Information by Listed Companies

Corporate & Commercial
The National Development and Reform Commission has issued the Measures for the Administration of Overseas Investment by Enterprises.
The General Office of the National Development and Reform Commission has issued the Implementation Plan for the Industrialization of Key Technologies in Priority Areas under the Three-Year Action Plan to Enhance the Core Competitiveness of the Manufacturing Sector (2018–2020).
In 2018, energy-related work focused on seven key areas, with a strong emphasis on addressing overcapacity in the coal-fired power sector.
The National Development and Reform Commission and the National Energy Administration have issued the “Notice on Issuing the Guiding Opinions on Promoting the Development of Biomass Heating.”
The Ministry of Finance plans six measures to curb local governments’ illegal borrowing.

Taxation
The State Council has promulgated the Regulations for the Implementation of the Environmental Protection Tax Law of the People’s Republic of China.
Four ministries and commissions have jointly issued the “Notice on the Policy of Temporarily Exempting Withholding Income Tax on Direct Investments Made by Foreign Investors Using Distributed Profits.”

Litigation & Arbitration
The Standing Committee of the National People’s Congress promulgated the Law of the People’s Republic of China on Tendering and Bidding.
The de facto controller of Qianbao.com turned himself in on suspicion of criminal activity.

Other
President Xi Jinping delivered his 2018 New Year message.
New energy vehicles are exempt from the vehicle acquisition tax.

Finance & Capital Markets
The People’s Bank of China has issued the “Regulations on Barcode Payment Services (Trial)”
On December 27, 2017, the People’s Bank of China issued the “Regulations on Barcode Payment Services (Trial).” To address irregularities in the payment sector, the regulations adopt the following key measures: First, they emphasize business qualification requirements. Specifically, payment institutions providing barcode‑based payment services to customers must obtain a license for online payment services; and when offering barcode payment acquiring services to both physical merchants and online merchants, they must separately hold licenses for bankcard acquiring and online payment services. Second, they reafoffice clearing‑management requirements. In response to certain payment institutions directly connecting with multiple banking financial institutions (hereinafter referred to as “banks”) or other payment institutions to expand their merchant base—thereby exacerbating the phenomenon of multi‑party direct connections—the regulations explicitly stipulate that, for cross‑bank transactions involving barcode payments, banks and payment institutions must process such transactions through the People’s Bank of China’s interbank clearing system or a legally qualified clearing institution. Third, they mandate the maintenance of fair market competition. Market participants are prohibited from disparaging the commercial reputation of other market entities in any form, from employing unfair competitive practices that harm the interests of others or exclude competitors, or from undermining the order of fair competition. Fourth, they standardize the generation and acceptance of barcodes. Measures include transaction verification methods, transaction limit management, information management and security safeguards, as well as the management of static barcode applications and the comprehensive use of payment tokenization technologies, all aimed at ensuring the security of barcode payment services. Fifth, they strengthen merchant management and risk control. Requirements are set forth covering merchant qualification review, the signing of acceptance agreements, merchant risk rating, merchant inspections, transaction‑risk monitoring, and customer security education, thereby reinforcing overall business risk management.

The People’s Bank of China and the China Securities Regulatory Commission have jointly issued the “Interim Guidelines on Green Bond Evaluation and Certification Practices.”
Recently, the People’s Bank of China and the China Securities Regulatory Commission jointly issued the “Interim Guidelines on the Conduct of Green Bond Evaluation and Certification” (hereinafter referred to as the “Guidelines”). The Guidelines emphasize that evaluation and certification institutions must meet certain qualification requirements and conduct their business in accordance with the principles of honesty and trustworthiness, objectivity and impartiality, and diligence and responsibility. They also establish self-regulatory oversight over green bond evaluation and certification institutions by instituting systems for supervisory spot checks and cross‑checks on the quality of such services, as well as disciplinary mechanisms to address violations of professional ethics—such as the submission of false information—and to prevent serious omissions or inaccuracies in evaluation and certification reports.
The Guidelines clarify that green bond assessment and certification comprise two components: pre-issuance and ongoing‑period assessments. The pre‑issuance assessment focuses on determining whether the issuer’s green bond framework is “compliant and comprehensive,” covering such aspects as the eligibility of green projects, the compliance of project screening and decision‑making procedures, the adequacy of proceeds‑management practices, the completeness of information‑disclosure and reporting systems, and the reasonableness of environmental‑benefit targets. The ongoing‑period assessment, in turn, evaluates whether these elements are being “effectively implemented,” with particular emphasis on the use of raised funds, the compliance of information disclosure, and the extent to which the anticipated environmental‑benefit targets have been achieved.
The Guidelines stipulate that each assessment and certification body may, based on the specific characteristics of green projects and the objectives of the assessment and certification, independently select from among the methods listed in the Guidelines—such as interviews, on-site inspections, and verification of project environmental benefits—to carry out its work. The Guidelines also specify standardized wording for assessment and certification conclusions, which are uniformly categorized into four types: “Compliant,” “No non‑compliance found,” “Non‑compliant,” and “Disclaimer: Unable to render a conclusion.” Furthermore, the Guidelines emphasize dynamic management of the green bond label: for green bonds whose assessment and certification conclude as “Non‑compliant,” if, after a prescribed period of rectification, they still fail to meet the required standards, their green bond label shall be revoked.

The China Banking Regulatory Commission has issued the “Administrative Measures on Capital Management for Financial Asset Management Companies (Trial).”
Recently, in order to strengthen capital regulation of financial asset management companies (hereinafter referred to as “asset management companies”), address regulatory gaps, enhance supervisory effectiveness, guide these companies to further focus on their core business of managing non‑performing assets, support the real economy and supply‑side structural reform, and standardize diversified operations, the China Banking Regulatory Commission issued the Measures for the Capital Management of Financial Asset Management Companies (Trial) (hereinafter referred to as the “Capital Measures”). The Capital Measures will come into formal effect on January 1, 2018.
The Capital Measures comprise six chapters—General Provisions, Capital Regulatory Requirements for the Group’s Parent Company, Capital Regulatory Requirements for the Group, Supervision and Inspection, Information Disclosure, and Supplementary Provisions—totaling 84 articles. The key emphasis is on the following five areas: First, in light of the business characteristics of asset management companies, appropriate capital adequacy standards are established, with clear second-pillar supervisory requirements and information disclosure obligations, thereby strengthening regulatory oversight and market discipline. Second, by setting differentiated risk weights for assets, asset management companies are guided to focus on their core business of non‑performing assets, in accordance with the principle of “relative concentration and prioritizing the principal business.” Third, prudent regulatory requirements are imposed on non‑financial subsidiaries within the group that are not subject to direct supervision but perform investment and financing functions and exhibit high leverage ratios, ensuring full coverage of capital regulation. Fourth, leverage‑ratio regulatory indicators and requirements are incorporated into the Capital Measures, creating a unified capital‑regulation framework; the methodology for calculating the group’s financial leverage ratio is refined to better manage risks associated with off‑balance‑sheet assets. Fifth, the group’s parent company and its relevant subsidiaries are required to include credit risk, market risk, and operational risk in their capital‑measurement frameworks, while selecting appropriate risk‑measurement methods tailored to the specific circumstances of asset management companies.

The China Securities Regulatory Commission is soliciting public comments on the “Opinions on Further Regulating the Engagement of Third-Party Institutions and Related Practices by Securities Offices in Investment Banking Business (Draft for Comments).”
On December 29, 2017, the China Securities Regulatory Commission (CSRC) formulated the “Opinions on Further Regulating the Engagement of Third-Party Institutions and Related Practices by Securities Offices in Investment Banking Business” (Draft for Public Comment), hereinafter referred to as the “Opinions,” and solicited public comments.
In recent years, investment banking activities have expanded rapidly. In the course of conducting such business, some securities offices have increasingly engaged, either directly or indirectly and for remuneration, a wide range of third-party institutions and individuals—whether to obtain specialized services or for other purposes. These engagement practices take on complex and varied forms; some of them are particularly prone to giving rise to conflicts of interest, commercial bribery, and other illicit practices, thereby posing potential risks to the industry’s orderly and sustainable development.
The Opinions cover four main areas: First, they reafoffice the fundamental principles of integrity-building and explicitly prohibit securities offices from engaging in any form of benefit transfer or commercial bribery. Second, they emphasize that securities offices must assume primary responsibility for preventing and controlling integrity-related risks, improve institutional mechanisms, strengthen oversight and control, and address compliance risks at their source. Third, they set out specific information-disclosure requirements for securities offices’ related engagement activities, establishing differentiated disclosure standards based on key factors such as the type of institution, the nature of services provided, and fee structures, according to the level of risk involved. Fourth, they require securities offices to verify and provide opinions on the relevant engagement activities of their investment-banking clients, as well as on the legality and compliance of such activities.

Revision of the Guidelines on the Content and Format of Periodic Reports by Listed Companies: Strengthening Disclosure of Environmental and Social Responsibility Information by Listed Companies
Recently, the China Securities Regulatory Commission has uniformly revised the guidelines on the content and format of annual and semi‑annual reports disclosed by listed companies, issuing the “Guidelines on the Content and Format of Annual Reports for Companies Issuing Securities to the Public, No. 2 (2017 Revision)” and the “Guidelines on the Content and Format of Semi‑Annual Reports for Companies Issuing Securities to the Public, No. 3 (2017 Revision).”
This revision explicitly establishes a tiered environmental information disclosure regime for listed companies: key polluting enterprises are required to disclose information mandatorily, while other companies are subject to a “comply or explain” principle. At the same time, companies are encouraged to voluntarily disclose information that promotes ecological protection and pollution prevention, thereby further strengthening their commitment to environmental and social responsibility.
At the same time, this revision introduces new information disclosure requirements for listed companies to support poverty alleviation and development efforts, encouraging them to disclose information on targeted poverty‑alleviation plans and outcomes. This further strengthens listed companies’ sense of responsibility, reinforces their commitment to poverty‑reduction initiatives, and underscores the capital market’s adherence to a people‑centered development philosophy.

Commercial & Corporate
The National Development and Reform Commission has issued the Measures for the Administration of Overseas Investment by Enterprises.
On December 26, the National Development and Reform Commission issued the Measures for the Administration of Outbound Investment by Enterprises (Order No. 11 of the National Development and Reform Commission, hereinafter referred to as the “New Measures”). The New Measures will take effect on March 1, 2018, at which time the Measures for the Approval and Filing of Outbound Investment Projects (Order No. 9 of the National Development and Reform Commission, hereinafter referred to as “Order No. 9”) will be simultaneously repealed. In response to key concerns raised by various sectors of society, a responsible official from the National Development and Reform Commission stated that the New Measures emphasize the integration of deregulation and regulation, introducing three concrete reforms to further standardize enterprises’ outbound investment activities.
The new measures emphasize three key reforms: First, they address regulatory gaps by bringing overseas investments undertaken by domestic enterprises and individuals through their controlled overseas entities within the scope of regulation and adopting targeted management measures. Second, they introduce innovative supervisory tools to enhance coordinated and end-to-end oversight. In response to weak links in the supervision of outbound investment, the new measures establish a collaborative regulatory mechanism, conducting inspections and oversight through online monitoring, interviews and inquiries, and spot checks and verifications. Third, they refine punitive measures and establish a record of violations and non‑compliance in outbound investment. For such unlawful and non‑compliant behaviors as malicious fragmentation, false declarations, obtaining approval documents or filing notices through improper means, unauthorized project implementation, failure to process changes as required, failure to report when reporting is mandated, unfair competition, threats to or harm to national interests and national security, and illegal provision of financing, the new measures clearly define penalties and strengthen enforcement.

The General Office of the National Development and Reform Commission has issued the Implementation Plan for the Industrialization of Key Technologies in Priority Areas under the Three-Year Action Plan to Enhance the Core Competitiveness of the Manufacturing Sector (2018–2020).
On December 26, the General Office of the National Development and Reform Commission issued the Implementation Plan for the Industrialization of Key Technologies in Priority Areas under the Three-Year Action Plan to Strengthen the Core Competitiveness of the Manufacturing Sector (2018–2020). The plan covers nine key priority areas, namely rail transit equipment, high-end ships and marine engineering equipment, intelligent robots, smart automobiles, modern agricultural machinery, high-end medical devices and pharmaceuticals, new materials, intelligent manufacturing, and major technological equipment—each representing a critical technology. The main contents are as follows:
I. Key Technological Solutions for Rail Transit Equipment: Enhancing Intelligence By implementing this plan, China will further strengthen its innovation capacity and industrialization level in critical rail transit technologies and equipment. Significant progress will be made in advancing the intelligence, product serialization, and standardization of rail transit systems, while a coordinated development framework spanning the upstream and downstream segments of the industry will essentially take shape, markedly bolstering the sector’s core competitiveness.
II. High-End Ships and Marine Engineering Equipment: Enhancing Independent Design Capabilities. China’s capabilities in the independent design, system integration, and general contracting of high-tech and specialized vessels have continued to improve. A number of ship and marine engineering equipment products have filled domestic gaps, the structure of marine resource‑exploitation equipment has been significantly upgraded, the rate of installation of key supporting equipment on board has steadily increased, R&D and design as well as testing and inspection facilities have become more sophisticated, and the industry’s core competitiveness has been markedly strengthened.
III. Key Technologies for Intelligent Robots: Promoting Intelligent Transformation in the Manufacturing Sector. The implementation plan outlines the main tasks and expected outcomes, including enhancing the integrated innovation capacity of critical common technologies, advancing the intelligent transformation of production processes in key manufacturing sectors, accelerating the promotion and application of intelligent service robots, conducting research and planning for next-generation intelligent robots, and strengthening capabilities in inspection, testing, and certification.
IV. Key Technological Solutions for Intelligent Vehicles: A Preliminary Industrial Ecosystem Has Taken Shape. Through the implementation of this plan, the National Platform for Innovative Development of Intelligent Vehicles has been essentially completed and put into substantive operation, and a preliminary self-reliant and controllable industrial ecosystem for intelligent vehicles has taken shape.
V. The Implementation Plan for the Industrialization of Key Technologies in Modern Agricultural Machinery has been issued. The goal is that, through the implementation of this plan, the range of agricultural machinery and equipment will be more comprehensive, essentially meeting the needs of full-process mechanization in grain production and effectively addressing the mechanization requirements of major cash crops.
VI. The Implementation Plan for the Industrialization of Key Technologies in High-End Medical Devices and Pharmaceuticals Has Been Issued. The plan aims to achieve the industrialization of more than 10 innovative drugs; reduce pharmaceutical expenditure by at least RMB 5 billion annually through the launch of China’s first generic or biosimilar products; attain formulation sales exceeding USD 1 billion in the European and U.S. markets; and secure the first-ever new‑drug registration approvals in these markets.
VII. The Implementation Plan for the Industrialization of Key New Materials Technologies Has Been Issued. The plan aims to advance China’s key material technologies and enable the independent production of a number of new materials that have significant implications for national economic development and people’s livelihoods, thereby filling domestic gaps.
VIII. The Implementation Plan for the Industrialization of Key Technologies in Manufacturing Intelligence has been issued. The goal is, through three years of concerted efforts, to see a steady stream of new technologies, products, models, and business formats in manufacturing intelligence; achieve breakthroughs in the research, development, and application of high-end intelligent systems; establish a largely comprehensive system of standardization, inspection and testing, and certification services; and essentially put in place an integrated smart industry framework.
9. The Implementation Plan for the Industrialization of Key Technologies in Major Technical Equipment Has Been Issued. The National Development and Reform Commission has formulated this plan, outlining three major tasks: developing complete sets of major technical equipment and integrated systems; enhancing the capability to supply critical components and process equipment for such systems; and improving the R&D and innovation system for major technical equipment.

In 2018, energy-related work focused on seven key areas, with a strong emphasis on addressing overcapacity in the coal-fired power sector.
Recently, the 2018 National Energy Work Conference was held in Beijing. The conference emphasized that, in 2018, energy work should align with the requirements of high-quality development, take supply-side structural reform as the central task, and coordinate efforts to ensure steady growth, advance reform, adjust the economic structure, improve people’s livelihoods, and guard against risks. First, focus on pressing contradictions and problems, and effectively enhance oil and gas security and the level of safe energy production. Second, prioritize green development, address challenges in integrating clean energy into the grid, vigorously advance strategic projects to restructure the energy mix, promote the clean and efficient use of coal, and significantly boost the clean development of the energy sector. Third, concentrate on coal and coal-fired power, deepen supply-side structural reform, secure a decisive victory in reducing excess coal capacity, and aggressively resolve overcapacity in the coal‑power sector. Fourth, prioritize breakthroughs in core technologies and their application, vigorously pursue major technological equipment R&D, refine and improve working mechanisms, and foster new drivers of innovation and technological progress. Fifth, focus on key areas and critical links, further deepening reforms of the electricity and oil-and-gas sectors, as well as the “delegation, regulation, and service” reform, while strengthening energy oversight and law-based governance. Sixth, concentrate on priority regions and vital sectors, steadily advancing clean heating in northern China, intensifying efforts to upgrade refined petroleum product quality, and substantially enhancing measures to benefit the public through energy policies. Seventh, emphasize major strategic cooperation, strengthen overall planning, highlight cooperative achievements, bolster discourse leadership, and comprehensively elevate the level of international energy collaboration.

The National Development and Reform Commission and the National Energy Administration have issued the “Notice on Issuing the Guiding Opinions on Promoting the Development of Biomass Heating.”
The National Development and Reform Commission and the National Energy Administration recently jointly issued the “Guiding Opinions on Promoting the Development of Biomass Heating” (hereinafter referred to as the “Guiding Opinions”).
Funds from the national renewable energy tariff surcharge will prioritize support for biomass cogeneration projects. In the biomass cogeneration sector, vigorous development of county‑level agricultural and forestry biomass cogeneration is underway, with new agricultural and forestry biomass power generation projects required to adopt cogeneration to provide heating for county‑level areas covering up to 3 million square meters. For biomass boiler heating, the primary fuels will be concentrated on agricultural and forestry biomass, biomass molded fuels, and biomass gas.
The “Guiding Opinions” also refine eight policy measures to promote biomass‑based heat supply. The key measures are as follows: First, strengthen organizational leadership by integrating biomass‑based heat supply into work plans and initiatives alongside efforts to address loose coal use and to implement “coal‑to‑gas” and “coal‑to‑electricity” conversions. Second, enhance planning guidance: energy authorities in all provinces, autonomous regions, and municipalities are required to formulate biomass‑power generation plans, and a national biomass‑power generation plan shall be developed based on the aggregation of these provincial and municipal plans. Cogeneration projects seeking subsidies from the National Renewable Energy Fund must be incorporated into both national and provincial plans. Third, leverage demonstration projects to drive broader implementation: in 2017, county‑level biomass‑based heat supply demonstration projects will be launched in northern regions such as Northeast China and North China, as well as in the 26 key cities along the Beijing–Tianjin–Hebei air‑pollution transmission corridor; meanwhile, biomass‑based industrial heat supply demonstrations will be carried out in southern China. Fourth, improve supporting policies: biomass‑based heat supply projects will receive the same incentives as “coal‑to‑gas” and “coal‑to‑electricity” initiatives—covering boiler replacement, end‑user heating subsidies, and district‑heating network subsidies—and priority access to national renewable‑energy tariff‑subsidy funds for biomass cogeneration projects.

The Ministry of Finance plans six measures to curb local governments’ illegal borrowing.
According to reports, in recent days, in order to prevent and defuse local government debt risks, the Ministry of Finance has outlined its next‑step approach to overseeing local borrowing, adopting six key measures to officely curb the unchecked expansion of debt: First, resolutely curb the growth of implicit debt and tightly control financial access for new project financing. Strengthen oversight of debt‑financing by central enterprises, and strictly prohibit any unauthorized practices that enable local governments to borrow indirectly. Second, actively yet prudently resolve existing stockpiles of implicit debt. Uphold the principle that the central government will not provide bailouts, decisively dispelling local governments’ “illusion” that the central government will foot the bill, and likewise eliminating financial institutions’ “illusion” that the government will assume ultimate liability. Third, open the “front door” for local governments to engage in standardized borrowing and financing. Fourth, steadily advance the market‑oriented transformation of financing platform companies. Fifth, improve the supervision and accountability framework by formulating a system of lifetime accountability and retrospective tracing of responsibility for local government bonds, rigorously investigating and holding accountable any violations of laws or regulations. Sixth, establish and refine a long‑term management mechanism.

Taxation TAXATATION
The State Council has promulgated the Regulations for the Implementation of the Environmental Protection Tax Law of the People’s Republic of China.
On December 25, 2017, Premier Li Keqiang of the State Council signed a State Council decree promulgating the Regulations for the Implementation of the Environmental Protection Tax Law of the People’s Republic of China (hereinafter referred to as the “Implementation Regulations”), which shall enter into force on January 1, 2018.
Within the framework of the Environmental Protection Tax Law, the Implementing Regulations refine provisions concerning taxable objects, tax bases, tax exemptions and reductions, and tax collection and administration, thereby better meeting the practical needs of environmental protection tax collection.
The tax base comprises three main aspects: First, the specific scope of “other solid waste” as defined in the “Environmental Protection Tax Rates and Items Table” shall be determined in accordance with the procedures set forth in Article 6, Paragraph 2 of the Environmental Protection Tax Law—namely, proposed by the people’s governments of provinces, autonomous regions, and municipalities directly under the central government, submitted to the standing committees of the people’s congresses at the same level for decision, and filed with the Standing Committee of the National People’s Congress and the State Council. Second, the scope of “urban and rural centralized sewage treatment facilities established in accordance with the law” has been clarified. Third, issues related to the payment of the environmental protection tax by large-scale livestock farms have been specified.
With respect to the tax base, in accordance with the Environmental Protection Tax Law, the tax base for taxable atmospheric and water pollutants is determined by the pollution equivalent units calculated on the basis of the quantity of pollutant emissions; for taxable solid waste, the tax base is determined by the quantity of solid waste discharged; and for taxable noise, the tax base is determined by the number of decibels by which the noise level exceeds the national standards.
In terms of tax collection and administration, to ensure the smooth implementation of environmental protection tax collection and management, the Implementing Regulations, while stipulating that local people’s governments at or above the county level shall strengthen leadership over this work and promptly coordinate to resolve major issues, further clarify the respective responsibilities of tax authorities and environmental protection departments in tax collection and administration, as well as the scope of information exchange between them. The Regulations also set forth specific provisions regarding the determination of the place for filing tax returns, the procedures for resolving jurisdictional disputes in tax collection, taxpayer identification, the specific circumstances constituting anomalies in tax return data, the principles for handling discrepancies between pollutant emission data reported by taxpayers and the relevant data submitted by environmental protection authorities, and the obligation of tax authorities and environmental protection departments to provide taxpayers, free of charge, with guidance, training, and advisory services.

Four ministries and commissions have jointly issued the “Notice on the Policy of Temporarily Exempting Withholding Income Tax on Direct Investments Made by Foreign Investors Using Distributed Profits.”
On December 28, 2017, the Ministry of Finance, the State Taxation Administration, the National Development and Reform Commission, and the Ministry of Commerce jointly issued the “Notice on the Policy of Temporarily Exempting Withholding Income Tax on Direct Investments Made by Foreign Investors Using Distributed Profits.” To maximize the effectiveness of encouraging foreign investors to expand their investments in China, the Notice extends the scope of the tax‑exempt treatment to cover most existing forms of investment by foreign investors in China. Specifically, the Notice stipulates that direct investments made by foreign investors using distributed profits—including capital increases, new projects, and equity acquisitions—shall be exempt from withholding income tax; however, this exemption does not apply to the acquisition of shares in listed companies through new issuance, share capitalization, or share purchases (except for eligible strategic investments). More precisely, such investments include: first, the increase or capitalization of paid‑in capital or capital reserves of resident enterprises within China; second, the establishment of new resident enterprises in China; third, the acquisition of equity interests in resident enterprises within China from unrelated parties; and fourth, other methods as prescribed by the Ministry of Finance and the State Taxation Administration.

LITIGATION & ARBITRATION
The Standing Committee of the National People’s Congress promulgated the Law of the People’s Republic of China on Tendering and Bidding.
On December 28, 2017, the revised Law on Tendering and Bidding came into effect. The key changes introduced by the new law are as follows:
1. Paragraph 3 of Article 13 is deleted. The provision in the Tendering and Bidding Law requiring tendering agencies to maintain a pool of experts in technical, economic, and other fields who meet the conditions set forth in Paragraph 3 of Article 37 of this Law—thus qualifying them to serve as members of the evaluation committee—is hereby removed.
2. Paragraph 1 of Article 14 is deleted. The following provision is removed: “For tendering agencies engaged in the agency services for engineering construction project tenders, their qualifications shall be certified by the construction administrative department under the State Council or the people’s government of a province, autonomous region, or directly administered municipality. The specific measures shall be formulated jointly by the construction administrative department under the State Council and the relevant departments under the State Council. As for tendering agencies engaged in other tendering agency services, the competent authority responsible for qualification certification shall be prescribed by the State Council.”
3. Amend paragraph 1 of Article 50, which currently reads: “In cases of serious violations, the qualification to act as a tendering agent shall be suspended or revoked,” to read: “In cases of serious violations, the entity shall be prohibited from acting as an agent for projects required by law to undergo tendering for a period of one to two years, and such prohibition shall be publicly announced; furthermore, its business license may be revoked by the administrative authority for industry and commerce.” The revised Article 50 now states: “If a tendering agency violates the provisions of this Law by disclosing confidential information or materials related to tendering activities, or by colluding with the tenderer or bidders to harm national interests, public interests, or the legitimate rights and interests of others, it shall be subject to a fine of no less than RMB 50,000 and no more than RMB 250,000. The persons directly in charge of the entity and other persons directly responsible shall each be fined an amount ranging from 5% to 10% of the fine imposed on the entity; any illegal gains shall also be confiscated. In cases of serious violations, the agency shall be prohibited from acting as an agent for projects required by law to undergo tendering for a period of one to two years, and such prohibition shall be publicly announced; moreover, its business license may be revoked by the administrative authority for industry and commerce. If the conduct constitutes a crime, criminal liability shall be pursued in accordance with the law. Where damage is caused to others, the agency shall bear liability for compensation in accordance with the law.”

The de facto controller of Qianbao.com turned himself in on suspicion of criminal activity.
On December 27, according to the official Weibo account of the Nanjing Public Security Bureau in Jiangsu Province, “Ping’an Nanjing,” Zhang Xiaolei, the de facto controller of Qianbao.com, turned himself in to the Nanjing public security authorities on December 26, 2017, on suspicion of criminal offenses. The Nanjing public security organs are currently conducting an investigation.

Other
President Xi Jinping delivered his 2018 New Year message.
On December 31, 2017, President Xi Jinping delivered his 2018 New Year message. The main points are as follows:
1. Showing concern for the people’s three “sensations”: At the outset of his congratulatory address, he highlighted the achievements of 2017, emphasizing that “the people have gained a greater sense of fulfillment, happiness, and security.” The report to the 19th National Congress of the Communist Party of China underscored that all the Party’s work must take the fundamental interests of the broadest masses as its highest standard.
2. Show concern for the people’s pressing and vexing issues. He pointed out, “I know that what the people care about most are matters related to education, employment, income, social security, healthcare, elderly care, housing, and the environment. While they have reaped many benefits, they also face numerous concerns and difficulties.” President Xi called on Party committees, governments, and cadres at all levels to keep the people’s safety, well-being, and daily needs constantly at heart, regard benefiting the people as their greatest achievement, anticipate what the people need, address their urgent concerns, and work to make their lives even happier and more fulfilling.
3. “Cheering” for the great achievements created by the Chinese people, the report of the 19th National Congress of the Communist Party of China mentions “innovation” 59 times and “creation” 26 times. The report underscores that the people are the creators of history and the fundamental force that determines the future and destiny of the Party and the country. Furthermore, it calls for “relying on the people to accomplish great historical feats.”
4. Being deeply moved by the stories of the people. The report to the 19th National Congress of the Communist Party of China stated that we should strengthen international communication capabilities, tell China’s story well, present a true, three-dimensional, and comprehensive image of China, and enhance the country’s cultural soft power. Recently, President Xi Jinping emphasized the need to tell the story of the Communist Party of China, the story of China, and the story of the Chinese people, thereby fostering mutual understanding and friendship between China and other countries.
5. A solemn commitment to lifting the impoverished out of poverty. The report to the 19th National Congress of the Communist Party of China emphasized mobilizing the entire Party, the whole country, and all sectors of society to adhere to targeted poverty alleviation and targeted poverty reduction, ensuring that by 2020, rural residents living below the current national poverty line will have been lifted out of poverty, all poverty-stricken counties will have been removed from the list, and regional poverty as a whole will be eradicated—achieving genuine poverty reduction and sustainable poverty elimination.
6. Issuing a call to the people: Let us work diligently and pragmatically. The report of the 19th National Congress of the Communist Party of China states, “We must uphold the principle that national rejuvenation depends on practical action.” In his New Year messages over the years, too, President Xi Jinping has consistently emphasized the importance of hard work and concrete results—for example, “Happiness does not fall from the sky; we must forge an unshakable belief in victory and continue to work tirelessly,” and “Let us all roll up our sleeves and work hard,” among other sentiments.
7. We care not only about the Chinese people, but also about the peoples of all countries around the world.

New energy vehicles are exempt from the vehicle acquisition tax.
To further support the innovative development of new-energy vehicles, on December 27, the Ministry of Finance, the State Taxation Administration, the Ministry of Industry and Information Technology, and the Ministry of Science and Technology jointly issued an announcement stating that, from January 1, 2018, to December 31, 2020, vehicle acquisition tax will be exempted for three categories of new-energy vehicles—pure electric, plug-in hybrid (including range-extended), and fuel-cell—that have been approved for sale within China.

JC Master Law Office
Address: 9th Floor, National Water Resources Building, No. 70 Qingjiang South Road, Nanjing City
Postal Code: 210036
Phone: 025-84503333
Fax: 025-84505533
Website: www.jcmaster.com
This legal notice is provided solely for informational purposes and does not constitute legal advice or a legal analysis of any specific case. The transmission of this legal notice does not establish an attorney–client relationship between JC Master Law Office and the user or reader. JC Master Law Office assumes no responsibility for any third-party content accessible via the internet. If you do not wish to receive this legal notice, please notify us by email at jcm@jcmaster.com.
The copyright in this legal information is owned by JC Master Law Office ©. Without written permission, no organization or individual may reproduce, publish, or cite it in any form.