JC Master Legal News Issue 803

Key Takeaways for This Issue

The People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission jointly issued the “Notice on Standardizing Bond Trading Activities of Market Participants.”
Recently, the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission jointly issued the “Notice on Standardizing Bond Trading Activities of Market Participants.” The Notice applies to on‑exchange and over‑the‑counter domestic qualified institutional investors that meet relevant requirements, as well as asset managers and custodians of non‑legal‑person products. Its scope covers eligible bond trading activities, including cash bond transactions, bond repurchase agreements, bond forwards, and bond lending.
The General Office of the National Development and Reform Commission has issued the “Opinions on the ‘Innovation and Development Strategy for Intelligent Vehicles’ (Draft for Comments).”
On January 5, 2018, the National Development and Reform Commission issued the “Opinions on the Draft ‘Smart Vehicle Innovation and Development Strategy’.” According to the draft, by 2020, China will have essentially established a framework encompassing technological innovation, an industrial ecosystem, road‑network infrastructure, regulatory standards, product oversight, and information security for standard‑compliant smart vehicles.
The Ministry of Finance and the State Taxation Administration have jointly issued the “Notice on Improving the Policy for Tax Credit of Foreign-Sourced Income of Enterprises.”
The Ministry of Finance and the State Taxation Administration recently jointly issued the “Notice on Improving the Policy for Tax Credit of Foreign-Sourced Income of Enterprises,” clarifying that, building on the existing method of country‑ (or region‑) specific but item‑agnostic credit, a new comprehensive credit approach—applicable across countries (or regions) and without item‑by‑item differentiation—will be introduced. In addition, the scope of eligible tax credits will be appropriately expanded, further promoting the integration of foreign investment and outbound investment.
The Supreme People’s Court has issued the “Provisions on Several Issues Concerning the Adjudication of Disputes over Compensation for Damage to Marine Natural Resources and the Marine Ecological Environment.”
Recently, the Supreme People’s Court issued the “Provisions on Several Issues Concerning the Adjudication of Disputes over Compensation for Damage to Marine Natural Resources and the Marine Ecological Environment” (hereinafter referred to as the “Provisions”). The Provisions stipulate that litigation concerning compensation for damage to marine natural resources and the marine ecological environment shall fall under the jurisdiction of the maritime court at the place where the damaging act occurred, the place where the damage resulted, or the place where preventive measures were taken.
The Ministry of Land and Resources has promulgated the Regulations on Law Enforcement Supervision in the Field of Land and Resources.
On January 2, Minister of Land and Resources Jiang Daming signed Order No. 79, promulgating the Regulations on Law Enforcement Supervision in the Field of Land and Resources (hereinafter referred to as the “Regulations”). The Regulations clearly delineate the law enforcement supervision duties of the competent land and resources authorities: conducting law enforcement inspections; stopping unlawful acts; imposing administrative penalties and administrative measures, and submitting recommendations for administrative disciplinary actions; and, where criminal offenses are suspected, referring relevant case materials to public security and procuratorial organs.

Table of Contents
Table of Contents

Finance & Capital Markets

The People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission jointly issued the “Notice on Standardizing Bond Trading Activities of Market Participants.”
The China Insurance Regulatory Commission has issued the “Notice on Matters Relating to the Establishment of Equity Investment Plans by Insurance Funds.”
The China Banking Regulatory Commission has issued the Interim Measures for the Administration of Equity in Commercial Banks.

The China Banking Regulatory Commission has issued the Measures for the Administration of Entrusted Loans by Commercial Banks.
The Shenzhen Stock Exchange has launched the market’s first publicly offered Panda corporate bond under the Belt and Road Initiative.

Corporate & Commercial

The General Office of the National Development and Reform Commission has issued the “Opinions on the ‘Innovation and Development Strategy for Intelligent Vehicles’ (Draft for Comments).”
Notice of the General Office of the National Development and Reform Commission on Further Improving the Registration of Credit Information for Government-Funded Industry Investment Funds
Two ministries have issued a supplementary notice on the pilot program for market-based trading of distributed generation.
The State Council has promulgated the newly revised Measures for the Exclusive Operation of Salt.
The Ministry of Transport and the State Administration of Science, Technology and Industry for National Defense have signed a cooperation agreement to jointly promote collaborative innovation in military–civilian integration.

Taxation

The Ministry of Finance and the State Taxation Administration have jointly issued the “Notice on Improving the Policy for Tax Credit of Foreign-Sourced Income of Enterprises.”
The State Taxation Administration has issued the “Announcement on Adjusting Matters Related to Value-Added Tax Return Filing.”

Litigation & Arbitration

The Supreme People’s Court has issued the “Provisions on Several Issues Concerning the Adjudication of Disputes over Compensation for Damage to Marine Natural Resources and the Marine Ecological Environment.”
The Supreme People’s Court has promulgated the “Provisions on Several Issues Concerning the Adjudication of Judicial Review Cases Involving Arbitration” and the “Relevant Provisions on the Reporting and Approval of Judicial Review Cases Involving Arbitration.”

Other

The Ministry of Land and Resources has promulgated the Regulations on Law Enforcement Supervision in the Field of Land and Resources.
Ministry of Justice: Providing Better and More Comprehensive Public Legal Services to Support Rural Revitalization

Finance & Capital Markets

The People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission jointly issued the “Notice on Standardizing Bond Trading Activities of Market Participants.”
Recently, the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission jointly issued the “Notice of the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, and the China Insurance Regulatory Commission on Standardizing Bond Trading Activities of Participants in the Bond Market” (Yin Fa [2017] No. 302, hereinafter referred to as the “Notice”).
The Notice applies to on‑exchange and off‑exchange domestic qualified institutional investors that meet the relevant requirements, as well as to asset managers and custodians of non‑corporate products. Its scope covers bond trading activities that comply with applicable regulations, including cash bond transactions, bond repurchase agreements, bond forwards, and bond lending.
With regard to internal control mechanisms, the Notice sets out clear standards for market participants on establishing internal control systems and risk‑control metrics, further emphasizing the segregation and effective isolation of front‑office functions, as well as unified management and defined responsibilities for middle‑ and back‑office units, while also imposing certain requirements on practitioners. At the same time, it encourages market participants to implement sound and reasonable incentive structures, discouraging practices such as “nominal affiliation” or departmental contracting that may weaken oversight and lead to distorted behavior and excessive speculation. By reviewing the requirements stipulated in previously issued documents, the Notice reiterates the prohibitions applicable to market participants, including the mutual leasing of accounts, transfer of benefits, insider trading, market manipulation, and circumvention of internal controls or regulatory oversight.
This notice highlights several regulatory measures, emphasizing that all bond transactions conducted in the bond market must be executed and documented on designated trading platforms through the signing of relevant transaction contracts and master agreements. It further clarifies that market participants, in accordance with the principle of substance over form, must structure bond transactions—whether involving temporary holding by a third party with an obligation to resell or temporary holding by another party with an obligation to repurchase—as outright repurchase agreements, account for them in compliance with applicable accounting standards, and use such accounting treatment to calculate risk‑control metrics and ensure unified management.
The CSRC simultaneously issued the accompanying document to Document No. 302—the “Notice on Further Strengthening Regulatory Oversight of Bond Trading by Securities and Fund Management Institutions”—which provides more detailed regulations governing the participation of securities offices, fund management companies, and their subsidiaries in bond trading across such business lines as proprietary trading, asset management (including both public and private funds), and investment advisory services.

The China Insurance Regulatory Commission has issued the “Notice on Matters Relating to the Establishment of Equity Investment Plans by Insurance Funds.”
On January 5, 2018, the China Insurance Regulatory Commission issued the “Notice on Matters Relating to the Establishment of Equity Investment Plans by Insurance Funds” (hereinafter referred to as the “Notice”). The primary objectives of this Notice are to implement the spirit of the National Financial Work Conference, enhance the role of insurance funds in supporting the real economy, effectively prevent insurance funds from engaging in equity investment‑related business through conduit arrangements, nested structures, and debt‑equity hybrid schemes, and curb the growth of local governments’ implicit liabilities.
The Notice focuses on regulating the establishment of equity‑investment‑plan business by insurance asset management institutions. First, it requires that the investment returns of such plans be linked to the operating performance or earnings of the underlying investee, thereby preventing the use of “equity in name, debt in reality” arrangements to covertly increase financing costs for real‑economy enterprises. In line with the debt‑like characteristics of “regular interest payments and principal repayment at maturity,” the Notice prohibits insurance asset management institutions from setting explicit return expectations and making fixed periodic payouts to investors, and also forbids stipulating that the invested enterprise or an affiliated third party must compulsorily redeem the principal upon maturity. The aim is to ensure that equity‑investment‑plan activities genuinely reflect their capital‑intensive nature and equity‑investment orientation, while avoiding illicit practices that could inflate local government debt or raise financing costs for real‑economy offices. Second, the Notice mandates that insurance asset management institutions assume active management responsibilities when establishing investment plans; they may not engage in channeling business—directly or indirectly—and are prohibited from undertaking nested investments. Third, a priority registration mechanism has been established to guide insurance funds in leveraging their unique strengths and better supporting the development of the real economy. Under the Notice, the China Insurance Regulatory Commission’s designated registration authorities will grant priority registration to equity‑investment plans that effectively serve major national development strategies, significant reform initiatives, key sectors, large‑scale infrastructure projects, and investments in real‑economy ventures.

The China Banking Regulatory Commission has issued the Interim Measures for the Administration of Equity in Commercial Banks.
On January 5, 2018, the China Banking Regulatory Commission issued the Interim Measures for the Administration of Equity in Commercial Banks (hereinafter referred to as the “Measures”). The Measures comprise seven chapters—General Provisions, Shareholder Responsibilities, Duties of Commercial Banks, Information Disclosure, Supervision and Administration, Legal Liability, and Supplementary Provisions—totaling fifty-nine articles. The Measures adopt a problem‑oriented approach, with particular emphasis on the following aspects:
First, a comprehensive “three-in-one”穿透监管 framework has been established, spanning shareholders, commercial banks, and regulatory authorities, with a focus on addressing issues such as hidden shareholders and nominee shareholding. The completeness, authenticity, and accuracy of shareholder information are the cornerstone of equity management in commercial banks. In response to violations like hidden shareholders and nominee shareholding, the Measures clearly delineate the responsibilities of major shareholders for submitting information, commercial banks for verifying such information, and regulatory authorities for making final determinations, thereby establishing a robust “three-in-one”穿透监管 framework.
Second, the scope of major shareholders is clearly defined, and their conduct is subject to stricter regulation, with a focus on addressing issues such as the abuse of shareholder rights and interference in bank operations by controlling shareholders. Specifically, major shareholders are defined as those who hold or control more than five percent of a commercial bank’s shares or voting rights, or who, although holding less than five percent of the total shares, nonetheless exert significant influence over the bank’s management and operations.
Third, strengthen the management of related-party transactions between commercial banks and their shareholders and related parties, with a focus on addressing issues such as the transfer of benefits and the erosion of bank assets. The Measures bring major shareholders, their controlling shareholders, ultimate controllers, affiliated parties, persons acting in concert, and ultimate beneficial owners under the scope of a commercial bank’s related-party management, covering all types of related-party transactions in which the bank effectively assumes credit risk, thereby preventing shareholders from diverting or misappropriating the bank’s funds through interbank investments, asset-management schemes, and other channels.
Fourth, the rules governing the investment of financial products in commercial banks have been clarified, with a focus on addressing the use of financial products for equity participation. Financial products may hold shares in listed commercial banks; however, the aggregate holdings of shares in the same commercial bank by a single investor, issuer, or manager, together with their de facto controllers, affiliates, and persons acting in concert, shall not exceed 5% of the total share capital of that commercial bank.
Fifth, the responsibilities of regulatory authorities have been strengthened, and regulatory tools have been clearly defined. The Measures adhere to the principle of categorized supervision, designating major shareholders that have a significant impact on commercial banks’ operations and management as key targets for oversight.

The China Banking Regulatory Commission has issued the Measures for the Administration of Entrusted Loans by Commercial Banks.
On January 6, 2018, the China Banking Regulatory Commission issued the Measures for the Administration of Entrusted Loans by Commercial Banks (hereinafter referred to as the “Measures”), which comprise five chapters and thirty-three articles. The Measures primarily regulate the following aspects:
I. Clarify the business positioning of entrusted loans and the responsibilities of all parties involved. The Measures stipulate that entrusted loan business is a commissioned agency activity undertaken by commercial banks. As trustees, commercial banks shall provide services in accordance with the principle of aligning rights, responsibilities, and interests; they may not designate borrowers on behalf of the entrusting party, participate in loan‑making decisions, or offer any form of guarantee. The entrusting party shall independently identify the borrower for the entrusted loan, conduct due diligence on the borrower’s qualifications and the loan project, and assume the credit risk associated with the entrusted loan. II. Standardize the sources of funds for entrusted loans. The Measures impose requirements for the legality and compliance of such funding sources: commercial banks may not disburse entrusted loans using funds under trust management on behalf of others, bank credit funds, special-purpose funds earmarked for specific uses, other debt‑based funds, or funds whose origins cannot be verified. III. Regulate the intended use of entrusted loan funds. Funds may not be used for production, operations, or investments in sectors or purposes prohibited by the state; they may not be invested in bonds, futures, financial derivatives, asset‑management products, or similar instruments; nor may they be used as registered capital, for registration‑related capital verification, or for equity‑based investments or capital increases and share expansions. IV. Require commercial banks to strengthen risk management of entrusted loan business. The Measures mandate that commercial banks strictly separate entrusted loan activities from their proprietary business, reinforcing risk isolation and operational oversight. V. Enhance regulatory oversight of entrusted loan business. The Measures specify that if a commercial bank engages in unauthorized handling of entrusted loan business, the China Banking Regulatory Commission or its local branches shall order it to make corrections within a prescribed time limit.

The Shenzhen Stock Exchange has launched the market’s first publicly offered Panda corporate bond under the Belt and Road Initiative.
Recently, the “Belt and Road” corporate bonds issued by Prologis Slowa China Overseas Holdings (Hong Kong) Co., Ltd. to qualified investors—hereinafter referred to as the Prologis “Belt and Road” corporate bonds—have undergone preliminary review by the Shenzhen Stock Exchange and have now received approval from the China Securities Regulatory Commission, marking the official launch of the market’s first publicly offered Panda corporate bond under the “Belt and Road” initiative. The issuance of this “Belt and Road” Panda corporate bond represents an important step taken by the Shenzhen Stock Exchange, under the leadership of the CSRC, to proactively align with national strategic priorities, steadily expand financial opening-up, advance the internationalization of the renminbi, optimize the allocation of financial resources, and enhance the capital market’s ability to serve the real economy.
Prologis’ “Belt and Road” corporate bond issuance is proposed to have a maximum size of RMB 12 billion, with both the issuer’s and the bond’s credit ratings at AAA. The proceeds are intended to finance the acquisition by Prologis Group, the issuer’s controlling shareholder, of logistics infrastructure assets along the European corridor of the Belt and Road Initiative. Such acquisitions will facilitate connectivity of infrastructure and smooth trade along the Belt and Road, strengthen the foundation of China–Europe cooperation, and help explore new mechanisms and practices for leveraging financial resources to support Belt and Road development.

Commercial & Corporate

The General Office of the National Development and Reform Commission has issued the “Opinions on the ‘Innovation and Development Strategy for Intelligent Vehicles’ (Draft for Comments).”
On January 5, 2018, the National Development and Reform Commission issued the “Opinions on the ‘Innovative Development Strategy for Intelligent Vehicles’ (Draft for Public Comment).” According to the draft, by 2020, China will have essentially established a framework encompassing technological innovation, an industrial ecosystem, road‑network infrastructure, regulatory standards, product oversight, and information security for Chinese‑standard intelligent vehicles. Mid- and high‑level intelligent vehicles will achieve market‑based deployment, with demonstrative operations in key regions yielding tangible results. Progress in developing intelligent road traffic systems will be significant, with vehicle‑to‑everything wireless communication networks (LTE‑V2X) achieving 90% coverage in major cities and on expressways, and BeiDou’s high‑precision spatiotemporal services providing full nationwide coverage. By 2025, China will have fully established a comprehensive system covering technological innovation, industrial ecology, road‑network infrastructure, regulatory standards, product supervision, and information security for Chinese‑standard intelligent vehicles. Nearly all new vehicles will be equipped with intelligent features, and high‑level intelligent vehicles will be deployed on a large scale. A high degree of coordination among people, vehicles, roads, and the cloud will be realized, with next‑generation vehicle‑to‑everything wireless communication networks (5G‑V2X) largely meeting the needs of intelligent vehicle development. By 2035, Chinese‑standard intelligent vehicles will enjoy global recognition, and China will take the lead in becoming a world‑class powerhouse in intelligent vehicles, enabling all citizens to share a smart‑vehicle society that is safe, efficient, green, and civilized.
The draft for public comment notes that, at present, a new round of scientific and technological revolution and industrial transformation is gaining momentum, and intelligent vehicles have become a strategic direction for the development of the automotive industry. Developing intelligent vehicles is not only an important means of addressing pressing issues facing society—such as road safety, traffic congestion, energy consumption, and environmental pollution—but also a crucial pillar for deepening supply-side structural reform, implementing an innovation-driven development strategy, and building a modern, strong nation. It holds great significance in continuously meeting the people’s growing aspirations for a better life.

The General Office of the National Development and Reform Commission has issued the “Notice on Further Improving the Registration of Credit Information for Government-Funded Industry Investment Funds.”
Recently, the General Office of the National Development and Reform Commission issued the “Notice on Further Improving the Registration of Credit Information for Government‑Funded Industry Investment Funds.” The notice stipulates that, in accordance with the Interim Measures for the Administration of Government‑Funded Industry Investment Funds (hereinafter referred to as the “Measures”), government‑funded industry investment funds shall be registered within 20 working days after the completion of fundraising in the National Government‑Funded Industry Investment Fund Credit Information Registration System or its regional subsystems (collectively referred to as the “Registration System”). Government‑funded industry investment funds established prior to the entry into force of the Measures must complete registration within two months of the Measures’ implementation. For government‑funded industry investment funds that have not yet been registered, the development and reform authorities shall urge them to apply for registration within 20 working days; failure to register within the prescribed period will result in their being designated as “government‑funded industry investment funds evading registration” or “trustees evading registration,” and such cases will be publicly announced through appropriate channels.

Two ministries have issued a supplementary notice on the pilot program for market-based trading of distributed generation.
On January 3, 2018, the General Office of the National Development and Reform Commission and the Comprehensive Department of the National Energy Administration issued the “Supplementary Notice on Launching Pilot Programs for Market-Based Trading of Distributed Generation,” which clearly sets out the requirements for the pilot schemes. The notice outlines three optional models for market-based trading of distributed generation, with the following respective rules: 1. A model in which distributed generation projects engage in direct electricity transactions with power users. This model is encouraged; under this arrangement, the distributed generation project entity and the power user agree on transaction terms through a contract and, together with the grid enterprise, sign a tripartite power supply and consumption agreement. Provided that the grid enterprise has clearly defined its responsibilities and service provisions, a bilateral power‑trading contract may also be concluded. The regulatory authority dispatched by the National Energy Administration, with the cooperation of the grid enterprise, will develop model contract templates. 2. A model in which the distributed generation project entity entrusts the grid enterprise to act as an agent for selling electricity. In this case, the grid enterprise shall draft the sub‑supply contract. 3. A model in which the grid enterprise purchases electricity at the nationally approved benchmark feed-in tariff for each type of generation and facilitates local consumption within the distribution network at or below 110 kV. Each provincial pricing authority, in coordination with the energy administration, shall select one to two regions to apply for pilot status. The pilot projects must meet the following conditions: (1) The local grid must possess adequate capacity to accommodate the projects and satisfy their connection requirements; (2) Selected projects shall comply with the relevant requirements set forth in the “Notice of the National Development and Reform Commission and the National Energy Administration on Launching Pilot Programs for Market-Based Trading of Distributed Generation” (NDRC Energy [2017] No. 1901), and enter into direct‑trade agreements in accordance with applicable regulations, ensuring that the proportion of locally consumed electricity is no less than 75%; (3) Projects that achieve full local consumption, if they voluntarily waive subsidies, shall not be subject to capacity‑limitation restrictions.

The State Council has promulgated the newly revised Measures for the Exclusive Operation of Salt.
January 4, 2018 — Premier Li Keqiang recently signed a State Council decree promulgating the revised Measures on the Exclusive Operation of Salt (hereinafter referred to as the “Measures”), which shall take effect from the date of promulgation.
In accordance with the provisions of the Salt Industry Reform Plan—namely, upholding the exclusive salt‑wholesale system, reforming the salt pricing mechanism, and abolishing planned management at the production, transportation, and sales stages—the Measures have refined the specific elements of the exclusive salt‑wholesale regime. First, provincial salt administration authorities, in line with unified planning and rational spatial allocation, shall review and designate designated salt‑production and designated salt‑wholesale enterprises. Second, when a designated salt‑production enterprise applies to engage in salt‑wholesale operations, the provincial salt administration authority shall designate it as a designated salt‑wholesale enterprise and issue a certificate thereof; such enterprises may sell salt only within the scope prescribed by the state, and no entity or individual may impede or restrict this activity; salt prices are determined independently by the operators. Third, the previous Measures on Exclusive Salt Administration, which mandated directive‑based planned management for salt production, wholesale, distribution, and transport, as well as the issuance of salt‑transport permits, have been deleted.
The Measures have refined the institutional framework for ensuring the safety of salt supply, stipulating that provincial-level salt administration authorities shall establish and improve a salt reserve system and assume responsibility for government‑mandated salt reserves; designated salt production and wholesale enterprises shall fulfill their corporate salt reserve obligations and maintain appropriate inventory levels; and local people’s governments at or above the county level shall adopt necessary measures to guarantee the supply of salt in remote and ethnic minority areas.
The Measures strengthen the control measures for the quality and safety of salt. Building on the provision that the competent salt administration authorities are responsible for overseeing the exclusive operation of salt, they further stipulate that the State Council’s food and drug regulatory authority, as well as departments designated by local people’s governments at or above the county level, shall be responsible for the supervision and management of salt quality and safety. The Measures also introduce credit‑based management for salt enterprises and their directors, supervisors, and senior management personnel, establishing and improving systems for recording and publicly disclosing credit information. They explicitly prohibit the sale of salt that does not meet food safety standards and refine the categories of products that are banned from being sold as salt. Moreover, the legal liabilities have been further clarified, with enhanced penalties for violations.

The Ministry of Transport and the State Administration of Science, Technology and Industry for National Defense have signed a cooperation agreement to jointly promote collaborative innovation in military–civilian integration.
Recently, the Ministry of Transport and the State Administration for Science, Technology and Industry for National Defense signed the Framework Cooperation Agreement on Promoting Collaborative Innovation in Military–Civilian Integration (hereinafter referred to as the “Agreement”). This marks the first-ever military–civilian integration cooperation agreement in the field of transport science and technology, aimed at fostering a deep‑seated development pattern of military–civilian integration across all factors, through multiple channels, and with high efficiency in both the transport sector and the national defense science, technology, and industry sectors.
Under the Agreement, the two departments will focus on cooperation in four key areas: first, fostering collaborative innovation in priority sectors by jointly undertaking major infrastructure projects, developing advanced equipment, and tackling critical technological challenges to support national strategies; second, enhancing technological exchange and cooperation through knowledge sharing, joint dissemination of research outcomes, and expert collaboration between their respective research institutions; third, jointly establishing innovation platforms to promote open access and shared use of major scientific research facilities and large-scale instruments; and fourth, advancing joint initiatives among ministry-affiliated universities and talent development, thereby deepening the integration of military and civilian sectors within higher education institutions serving the transportation industry.

Taxation TAXATATION

 
The Ministry of Finance and the State Taxation Administration have jointly issued the “Notice on Improving the Policy for Tax Credit of Foreign-Sourced Income of Enterprises.”
The Ministry of Finance and the State Taxation Administration recently jointly issued the “Notice on Improving the Policy for Tax Credit of Enterprises’ Foreign-Sourced Income,” clarifying that, building on the existing method of country‑ (or region‑) specific but item‑non‑specific credit, a new comprehensive credit approach—applicable across countries (or regions) and without item‑by‑item differentiation—will be introduced. In addition, the number of tiers eligible for credit will be appropriately expanded, further promoting the integration of foreign investment utilization with outbound investment. The main contents are as follows:
I. An enterprise may choose to calculate its foreign-source taxable income either on a country-by-country basis (i.e., “country‑by‑country, item‑by‑item”) or on an aggregate basis without distinguishing countries or regions (i.e., “no country‑by‑country, no item‑by‑item” treatment), and shall compute its creditable foreign income tax and the corresponding credit limit separately in accordance with the tax rates set forth in Article 8 of Document Cai Shui [2009] No. 125. Once this method is selected, it may not be changed within five years. If an enterprise elects to adopt a method different from that used in prior years (hereinafter referred to as the “new method”) for calculating its creditable foreign income tax and credit limit, any remaining balance of foreign income tax that was not fully credited under the provisions of Document Cai Shui [2009] No. 125 in previous years may, during the remaining carryforward period prescribed by tax law, continue to be carried forward and credited against the new‑method‑calculated credit limit.
II. With respect to dividend income earned by an enterprise overseas, when calculating the amount of foreign‑source dividend income eligible for tax credit and the applicable credit limit in accordance with the relevant provisions, the foreign enterprises in which the enterprise directly or indirectly holds a 20% or more equity interest shall be limited to those five tiers of foreign enterprises determined pursuant to the shareholding structure set forth in Article 6 of Document Cai Shui [2009] No. 125.

The State Taxation Administration has issued the “Announcement on Adjusting Matters Related to Value-Added Tax Return Filing.”
Recently, the State Taxation Administration issued the “Announcement on Adjusting Matters Related to Value-Added Tax Return Filing” (State Taxation Administration Announcement [2017] No. 53). The contents of the announcement are as follows: 1. Repeal Annex 1, “Schedule of Input VAT Credit for Fixed Assets (excluding real estate),” of the “Announcement of the State Taxation Administration on Matters Related to Value-Added Tax Return Filing Following the Comprehensive Implementation of the Pilot Program to Replace Business Tax with Value-Added Tax” (State Taxation Administration Announcement No. 13 of 2016). 2. Repeal Annex 1, “Detailed Breakdown of the Composition of Input VAT Credit for the Current Period,” of the “Announcement of the State Taxation Administration on Adjusting Matters Related to Value-Added Tax Return Filing” (State Taxation Administration Announcement No. 27 of 2016).

LITIGATION & ARBITRATION

The Supreme People’s Court has issued the “Provisions on Several Issues Concerning the Adjudication of Disputes over Compensation for Damage to Marine Natural Resources and the Marine Ecological Environment.”
Recently, the Supreme People’s Court issued the “Provisions on Several Issues Concerning the Adjudication of Disputes over Compensation for Damage to Marine Natural Resources and the Marine Ecological Environment” (hereinafter referred to as the “Provisions”). The Provisions stipulate that litigation concerning compensation for damage to marine natural resources and the marine ecological environment shall fall under the jurisdiction of the maritime court at the place where the damaging act occurred, the place where the damage resulted, or the place where preventive measures were taken.
The Regulations stipulate that, upon accepting a lawsuit for compensation for damage to marine natural resources and the marine ecological environment, the people’s court shall, within five days from the date of case filing, publicly announce the acceptance of the case. If it is found that the same damage involves different regions or different administrative departments, or that other authorities legally vested with jurisdiction over marine environmental supervision and administration are entitled to seek compensation for different types of damage, the court may notify such authorities in writing. Within thirty days from the date of the public announcement, or within seven days from the date of written notification, any other authority with standing to bring suit concerning the same damage may apply to join the litigation; upon review and conofficeation that the statutory requirements are met, the people’s court shall designate such authority as a co‑plaintiff. Applications filed after the prescribed time limits shall not be permitted.
The Regulations stipulate that when an authority vested with the legal power to supervise and manage the marine environment seeks to hold a party responsible for damage to marine natural resources and the marine ecological environment accountable by requiring it to cease the infringement, remove obstructions, eliminate hazards, restore the original state, offer an apology, and compensate for losses, the people’s courts shall, in accordance with the claims set forth in the litigation and the specific circumstances of the case, reasonably determine the civil liabilities to be borne by the responsible party.
The Regulations specify that the scope of compensation for losses to marine natural resources and the ecological environment includes expenses for preventive measures, restoration costs, losses incurred during the restoration period, and investigation and assessment fees. Reasonable costs that will inevitably be incurred in future remediation, as well as losses sustained during the restoration period, may be determined on the basis of expert opinions issued by qualified appraisal and assessment institutions in accordance with applicable laws and regulations and the technical standards for appraisal and assessment promulgated by the competent state authorities. Where it is difficult to ascertain restoration costs and losses during the restoration period, the amount of compensation may be reasonably determined by reference to the benefits obtained by the responsible party from the harmful conduct or the reductions in pollution‑prevention expenditures. If such benefits or expenditures cannot be established, a reasonable amount may be酌定 (arbitrarily determined) by referring to relevant statistical data from government departments or other evidence demonstrating the average income and average pollution‑prevention expenditures of similar producers in the same region during the same period.

The Supreme People’s Court has promulgated the “Provisions on Several Issues Concerning the Adjudication of Judicial Review Cases Involving Arbitration” and the “Relevant Provisions on the Reporting and Approval of Judicial Review Cases Involving Arbitration.”
Recently, the Supreme People’s Court promulgated the “Provisions on Several Issues Concerning the Adjudication of Judicial Review Cases Involving Arbitration” (hereinafter referred to as the Judicial Interpretation on Judicial Review of Arbitration) and the “Relevant Provisions on the Reporting and Approval of Judicial Review Cases Involving Arbitration” (hereinafter referred to as the Judicial Interpretation on Reporting and Approval). The Judicial Interpretation on Judicial Review of Arbitration clarifies the scope of such cases, which includes: applications for conofficeation of the validity of arbitration agreements; applications for enforcement or setting aside of arbitral awards rendered by mainland Chinese arbitration institutions; applications for recognition and enforcement of arbitral awards from the Hong Kong Special Administrative Region, the Macao Special Administrative Region, and Taiwan; and applications for the recognition and enforcement of foreign arbitral awards, among others.
The judicial interpretation on the review of arbitration-related matters clarifies that, in handling judicial review cases involving foreign-related or Hong Kong, Macao, and Taiwan arbitration, a intermediate people’s court or a specialized court, upon determining through review that an arbitration agreement is invalid, shall submit the case for approval to the higher people’s court within its jurisdiction. If the higher people’s court, after review, intends to concur, it shall then submit the case to the Supreme People’s Court for approval; only after the Supreme People’s Court has reviewed and issued its opinion may a ruling be rendered in accordance with that opinion. With respect to non‑foreign‑related or non‑Hong Kong, Macao, and Taiwan arbitration judicial review cases, if, upon review, it is proposed to declare an arbitration agreement invalid, the matter shall be submitted to the higher people’s court within the jurisdiction. However, where the parties’ domiciles span multiple provincial administrative regions, or where enforcement is refused or an award of a mainland Chinese arbitration institution is set aside on the ground of contravening public interest, such cases shall be submitted directly to the Supreme People’s Court for approval.

Other

The Ministry of Land and Resources has promulgated the Regulations on Law Enforcement Supervision in the Field of Land and Resources.
On January 2, Minister of Land and Resources Jiang Daming signed Order No. 79, promulgating the Regulations on Law Enforcement Supervision in the Field of Land and Resources (hereinafter referred to as the “Regulations”). The Regulations clearly delineate the law enforcement supervision duties of the competent land and resources authorities: conducting law enforcement inspections; stopping unlawful acts; imposing administrative penalties and administrative measures, and submitting recommendations for administrative disciplinary actions; and, where criminal offenses are suspected, referring relevant case materials to public security and procuratorial organs.
Local land and resources authorities at or above the county level may, as required by their work, entrust land and resources enforcement‑supervision teams with the exercise of enforcement‑supervision powers. The measures for land and resources enforcement supervision include: reviewing or copying relevant materials; requiring the inspected entity or individual to provide explanations and questioning parties, suspects, and witnesses; conducting site surveys, taking photographs, making audio recordings, and filming at locations of violations; ordering rectification within a specified time limit; reporting the facts of violations to the people’s government at the same level and to the higher‑level land and resources authority, and requesting that the local people’s government coordinate with relevant departments to take appropriate measures; suspending, in accordance with the law, the processing of related approval, registration, or licensing procedures; recommending that the local people’s government summon the principal officials of the local government for a talk; and providing feedback to the people’s government or the land and resources authority and submitting recommendations on enforcement supervision. In addition, the Regulations explicitly codify several successful practices in enforcement supervision developed in recent years, such as dynamic patrols, publicized case‑by‑case oversight, and public announcements.

Ministry of Justice: Providing Better and More Comprehensive Public Legal Services to Support Rural Revitalization
On the morning of January 4, 2018, the Ministry of Justice convened a Party Group meeting to convey and study the spirit of the Central Rural Work Conference and to make arrangements for implementing that spirit in judicial and administrative work, thereby supporting the rural revitalization strategy.
The meeting noted that the Central Rural Work Conference set forth clear and specific requirements for judicial and administrative work to strengthen public legal services in rural areas. Judicial and administrative efforts have great potential to contribute to the rural revitalization strategy, yet the tasks ahead are formidable—presenting both unprecedented opportunities and challenges. As China’s principal social contradiction has evolved, judicial and administrative work must focus on meeting the growing demands of the people, particularly rural residents, for democracy, the rule of law, fairness, justice, security, and a sound environment. Efforts should be made to deliver higher‑quality, more diversified public legal service offerings, ensuring that rural communities experience a fuller sense of gain, happiness, and security—ones that are more substantial, better protected, and more sustainable. Judicial offices serve as vital platforms for delivering public legal services in rural areas; therefore, their capacity must be strengthened through improved infrastructure and equipment, making it easier for residents to access online information and legal advice. For example, whether government poverty‑alleviation funds are disbursed in full to impoverished farmers can be verified through online inquiries, while questions about the effective implementation of relevant laws and policies can be addressed by consulting legal service personnel. Providing legal assistance to support poverty alleviation and help those in need should be designated as a special mandate for judicial offices, with proactive outreach and engagement guided by the principles of supply‑side structural reform.

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