JC Master Legal News Issue 855

Key Takeaways for This Issue

CSRC: The coordinated mechanism for integrity-based regulation in the capital market has been further strengthened.

In recent years, the China Securities Regulatory Commission has thoroughly studied and implemented the spirit of General Secretary Xi Jinping’s series of important instructions on strengthening social integrity, earnestly carried out the State Council’s decisions and arrangements to transform government functions, deepen administrative streamlining and delegation of power, innovate regulatory approaches, and improve the socialist market economy system, and proactively seized the favorable momentum presented by the accelerated development of government informationization and the national credit information sharing platform, thereby expediting the establishment of a comprehensive framework for integrity-based constraints and coordinated regulation that spans departments, sectors, and regions.

Five departments are advancing efforts to streamline business deregistration.

The State Administration for Market Regulation, the Ministry of Human Resources and Social Security, the Ministry of Commerce, the General Administration of Customs, and the State Taxation Administration recently issued the “Notice on Promoting the Facilitation of Enterprise Deregistration” (Guo Shi Jian Zhu [2019] No. 30).

The State Taxation Administration is making every effort to ensure the effective implementation of tax and fee reduction policies.

The State Taxation Administration recently issued the “Notice on Thoroughly Implementing Policies and Measures for Tax and Fee Reductions” (Tax General Notice [2019] No. 13).

The World Executive Congress adopted the Shanghai Declaration.

On the afternoon of January 22, all parties attending the World Congress on Enforcement unanimously adopted the Shanghai Declaration of the World Congress on Enforcement (hereinafter referred to as the “Shanghai Declaration”), and the congress concluded after successfully completing its agenda. Chief Justice of the People’s Republic of China and President of the Supreme People’s Court, Zhou Qiang, attended the closing ceremony and delivered a speech.

Ministry of Civil Affairs: National-level industry associations and chambers of commerce are required to proactively reduce excessively high fees.

On January 23, the Ministry of Civil Affairs convened a symposium on implementing the central government’s spirit of tax and fee reductions among national industry associations and chambers of commerce. The meeting stipulated that, in 2019, these organizations should adhere to a bottom line of refraining from unauthorized or compulsory fees, while striving to set high standards and impose stringent requirements to reduce both fee levels and the overall scale of charges, thereby making more effective and robust contributions to alleviating the burden on enterprises and fostering a favorable business environment.

Table of Contents

Table of Contents

Finance & Capital Markets

CSRC: The coordinated mechanism for integrity-based regulation in the capital market has been further strengthened.

The implementation plan for the STAR Market has been approved, and the registration-based system will be piloted concurrently.

The Shanghai Futures Exchange has revised the “Shanghai Futures Exchange Risk Control Management Measures.”

The Shanghai Stock Exchange and the Shanghai Environment and Energy Exchange jointly hosted a green investment seminar and a signing ceremony for a memorandum of cooperation.

The CPC Central Committee and the State Council: Initiate the establishment of the Xiong’an Equity Exchange and support the founding of a Capital Markets Institute.

Corporate & Commercial

Five departments are advancing efforts to streamline business deregistration.

China Banking and Insurance Regulatory Commission: Allows insurance institutions to invest in perpetual capital bonds.

The China Banking Association has issued the financial leasing industry’s first self-regulatory code.

Two departments: Supporting the green development of private enterprises

NDRC: Banks are encouraged to extend medium- and long-term loans to private enterprises, and market access will be further relaxed.

Taxation

The State Taxation Administration is making every effort to ensure the effective implementation of tax and fee reduction policies.

Four departments have clarified the income tax policy for individual partners of venture capital enterprises.

The State Taxation Administration has clarified the administration and collection issues related to the VAT exemption for small-scale taxpayers.

Litigation & Arbitration

The World Executive Congress adopted the Shanghai Declaration.

Improving enforcement legislation to address difficulties in enforcement; the Supreme People’s Court is advancing the establishment of a personal bankruptcy system.

A lawyer in Guangdong had his license revoked for submitting an unlawful defense statement.

Other

Ministry of Civil Affairs: National-level industry associations and chambers of commerce are required to proactively reduce excessively high fees.

Guangdong has preliminarily clarified the “gene-edited baby incident.”

Finance & Capital Markets

CSRC: The coordinated mechanism for integrity-based regulation in the capital market has been further strengthened.

In recent years, the China Securities Regulatory Commission has thoroughly studied and implemented the spirit of General Secretary Xi Jinping’s series of important instructions on strengthening social integrity, earnestly carried out the State Council’s decisions and arrangements to transform government functions, deepen administrative streamlining and delegation of power, innovate regulatory approaches, and improve the socialist market economy, and proactively seized the favorable momentum presented by the accelerated development of government informationization and the national credit information sharing platform. As a result, it has expedited the establishment of a comprehensive framework for integrity-based constraints and coordinated regulation that spans departments, sectors, and regions. Overall, with the construction of a social credit system as a key pillar, joint punitive measures against dishonesty and joint incentives for trustworthiness as its core components, and targeted rewards and penalties in priority areas as crucial tools, a coordinated mechanism for integrity‑based regulation in the capital market has been essentially put in place, playing an increasingly significant role in enhancing regulatory effectiveness and elevating market integrity.

The China Securities Regulatory Commission has made full use of integrity‑based regulatory measures to impose restrictions on violators and those who have lost trust, thereby guiding all market participants to operate with integrity, disclose information truthfully, and trade in compliance. Since 2015, when it took the lead in signing the Memorandum of Cooperation on Joint Punitive Measures Against Responsible Parties of Listed Companies That Have Violated Laws or Lost Trust, the Commission has submitted a total of 10,530 pieces of information on law‑breaking and untrustworthy conduct to the National Credit Information Sharing Platform, including 4,091 administrative penalty records, 469 market‑entry ban records, and 5,970 disciplinary action records. These data are made available to nearly twenty government departments—including the National Development and Reform Commission, the People’s Bank of China, the Ministry of Finance, the General Administration of Customs, and the State Administration for Market Regulation—for reference in administrative licensing, routine supervision, and other related functions. At the local level, in 2018, development and reform commissions, tax authorities, customs agencies, human resources and social security departments, banks, and other relevant bodies in multiple provinces and municipalities imposed, in accordance with the law, 54 restrictive measures across various domains—such as government procurement, subsidized funding, bank credit lines, customs certification, and performance appraisal and recognition—on 13 listed companies that had been subject to administrative penalties by the Commission. These measures ensured that wrongdoers bore substantial costs, achieving an organic integration of high costs for illegal and dishonest behavior with high efficiency in social governance.

In 2018, the China Securities Regulatory Commission (CSRC) newly participated in the signing of inter‑ministerial joint punishment memoranda targeting untrustworthy conduct in 21 sectors, including government procurement, scientific research, public resource transactions, entry‑exit inspection and quarantine, intellectual property, social insurance, culture, healthcare, and tourism, as well as a joint incentive memorandum for trustworthy behavior in the transportation infrastructure construction sector. Additionally, the CSRC signed separate special cooperation agreements with the State Administration for Market Regulation and the Civil Aviation Administration of China to strengthen information sharing and joint punitive measures specifically aimed at enterprises that have committed serious violations or acted in bad faith. In collaboration with the Civil Aviation Administration of China and China Railway Corporation, the CSRC has imposed restrictions on relevant responsible parties of listed companies that fail to honor public commitments on time, as well as on individuals who fail to pay administrative fines and confiscations related to securities and futures violations, prohibiting them from traveling on civil aircraft and occupying higher‑class seats on trains.

As of the end of 2018, the China Securities Regulatory Commission had cumulatively participated in the signing of 50 joint memoranda on integrity‑based rewards and punishments. The capital market integrity database had collected more than ten million pieces of inter‑agency shared information, covering key socio‑economic sectors such as judicial, tax, customs, work safety, and market regulation. In 2018, during the review of administrative licensing applications, the CSRC requested verification and clarification in 123 cases involving adverse records, ordered the replacement of personnel with poor records in 11 cases, issued two decisions denying approval, and received five instances in which applicants voluntarily withdrew their applications. Differentiated on-site inspection schedules were implemented for numerous enterprises with records of dishonesty, while multiple lawbreakers with illegal or untrustworthy histories faced enhanced penalties, including maximum‑level sanctions. Since June 2018, 95 individuals with serious breaches of trust—those who failed to pay CSRC fines by the deadline or to fulfill public commitments related to listed companies—have been publicly listed on the “Credit China” website and subjected to travel restrictions (including limitations on air and rail travel), resulting in the collection of RMB 142 million in fines and confiscated proceeds.

Going forward, the China Securities Regulatory Commission will continue to prioritize the overarching goals of reform, development, and stability in the capital market. In line with the coordinated planning of the Inter-Ministerial Joint Conference on Building the Social Credit System and taking into account the specific realities of the capital market, it will actively expand cross‑departmental information sharing and joint incentive and penalty mechanisms, continuously enrich its toolkit for integrity‑based regulation, and further enhance the overall level of market integrity.

The implementation plan for the STAR Market has been approved, and the registration-based system will be piloted concurrently.

On January 23, the Sixth Meeting of the Central Commission for Comprehensively Deepening Reform reviewed and approved the “Overall Implementation Plan for Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration-Based System” and the “Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration-Based System.”

The meeting noted that establishing the STAR Market on the Shanghai Stock Exchange and piloting a registration-based system is an important measure for implementing the innovation-driven development strategy and deepening capital market reform. It is necessary to enhance the capital market’s inclusiveness toward science and technology innovation enterprises, focus on supporting breakthroughs in critical core technologies, and strengthen its ability to serve the real economy. The registration-based system should be piloted steadily, with coordinated efforts to advance foundational reforms covering issuance, listing, information disclosure, trading, and delisting, and to establish and improve a stock issuance and listing regime centered on information disclosure.

Analysts believe that, at present, the A-share market is undergoing continuous improvement, with favorable market conditions that have laid a solid foundation for the establishment of the STAR Market and the pilot implementation of the registration-based IPO system. Moreover, the creation of the STAR Market on the Shanghai Stock Exchange and the trial of the registration system carry even greater significance: the registration system helps attract high-quality companies to go public, accelerates the listing process, enhances the efficiency of resource allocation, and thereby better supports the development of the real economy.

According to disclosures, the Shanghai Stock Exchange is prioritizing five key sectors for securities offices’ recommendations:

I. Next-generation information technologies, including integrated circuits, artificial intelligence, cloud computing, big data, the Internet, software, and the Internet of Things, among others.

II. High-end equipment manufacturing and new materials, primarily encompassing shipbuilding, high-end rail transit, offshore engineering, high-end CNC machine tools, robotics, and advanced materials.

III. New Energy and Energy Conservation & Environmental Protection, primarily encompassing new energy, new-energy vehicles, and advanced energy-saving and environmental protection technologies.

IV. Biopharmaceuticals, which primarily encompass biopharmaceuticals and medical devices.

V. In the field of technical services, enterprises primarily provide technical support for semiconductor integrated circuits, new energy, high-end equipment manufacturing, and biopharmaceuticals.

All of the aforementioned industries are high-tech and emerging sectors, and the above requirements are similar to those imposed by regulators in 2018 on CDR pilot companies.

The Shanghai Futures Exchange has revised the “Shanghai Futures Exchange Risk Control Management Measures.”

The Shanghai Futures Exchange recently issued an announcement on the “Shanghai Futures Exchange Risk Control Management Measures (Revised Draft).”

Specifically, these revisions cover the position‑based margin tiering system and the position limit regime. The revised position limit regime will take effect from the trading session on March 18, 2019 (i.e., starting with the night session on the evening of March 15), while the abolition of the position‑based margin tiering system will become effective upon the close‑of‑day settlement on March 18, 2019.

Attachment: Announcement of the “Shanghai Futures Exchange Risk Control Management Measures (Revised Draft).”

To implement the spirit of the securities and futures regulatory conference, better serve the real economy, meet market demand, and enhance the functionality of the futures market, our exchange has revised the “Shanghai Futures Exchange Risk Control Management Measures,” with specific changes pertaining to the position‑based margin tiering system and the position limit regime. The aforementioned revisions have been reviewed and approved by our Board of Directors and reported to the China Securities Regulatory Commission; they are hereby promulgated and shall take effect on March 18, 2019. In particular, the revised position limit regime will be implemented starting from the trading session on March 18, 2019 (i.e., from the night session on the evening of March 15), while the abolition of the position‑based margin tiering system will take effect upon the close of settlement on March 18, 2019.
This is to notify you.

The Shanghai Stock Exchange and the Shanghai Environment and Energy Exchange jointly hosted a green investment seminar and a signing ceremony for a memorandum of cooperation.

On January 24, 2019, the Shanghai Stock Exchange and the Shanghai Environment and Energy Exchange co-hosted a green investment seminar and a signing ceremony for a memorandum of cooperation, with more than one hundred representatives from fund management companies and listed corporations in attendance.

Li Jun, Deputy Director of the Shanghai Municipal Local Financial Supervision and Administration, attended the event and delivered a speech. He highly commended the collaboration between the Shanghai Stock Exchange and the Shanghai Environment Exchange, noting that their partnership has created a valuable opportunity for building Shanghai’s green finance framework and holds significant implications for the nationwide development of green finance. He expressed his anticipation that the two institutions will continue to pioneer innovative practices in green finance, enriching the sector’s scope through exchanges and cooperation in areas such as green investment. At the same time, he urged all market participants to deepen their understanding of environmental risks, prioritize environmental sustainability, and contribute to the establishment and refinement of a robust green finance system.

Qu Bo, Deputy General Manager of the Shanghai Stock Exchange, reviewed the Exchange’s extensive efforts in the field of green finance and emphasized that the collaboration between the Shanghai Stock Exchange and the Shanghai Environment and Energy Exchange is of great significance for advancing the development of green finance. On the one hand, this joint cooperation helps guide market institutions and retail investors toward green investing, thereby fostering broader awareness and adoption of green investment principles. On the other hand, the two exchanges can jointly develop green investment indices and financial products, providing investors with diversified asset‑allocation tools and supporting the growth of the green finance market. Moreover, this partnership will contribute to the development of Shanghai as an international financial center and enhance China’s influence in global capital markets.

Lin Hui, Chairman of the Shanghai Environment Exchange, outlined the progress the Exchange has made in carbon market development and green finance, noting that the collaboration between the two parties will steer the professionalization and standardization of green investment and foster a diversified array of green investment products tailored to market needs. Leveraging its expertise and resource advantages in the green and low-carbon sectors, the Shanghai Environment Exchange will work closely with the Shanghai Stock Exchange to strengthen the foundations of green finance and elevate the role of green development in capital market investment decision-making. It is believed that this partnership will enrich Shanghai’s and China’s green finance framework, contributing meaningfully to the advancement of the country’s green finance agenda.

Subsequently, Que Bo, Deputy General Manager of the Shanghai Stock Exchange, and Lai Xiaoming, General Manager of the Shanghai Environment Exchange, signed a memorandum of cooperation on behalf of their respective organizations. Following the signing ceremony, Liu Wei, Deputy Director of the International Development Department of the Shanghai Stock Exchange, presented the “Shanghai Stock Exchange Green Finance Development Plan,” while Dr. Li Jin, Assistant to the General Manager of the Shanghai Environment Exchange, provided a comprehensive overview of innovations in the carbon market and the field of green investment. Representatives from the Asset Management Association of China, Hwabao Fund, and Deutsche Börse Group delivered presentations on “ESG Investment Practices in China,” “The Application of Green Investment Indices in Fund Investment Strategies,” and “Internationalization Efforts for Sustainability Indices,” respectively.

Taking this signing ceremony as an opportunity, the Shanghai Stock Exchange and the Shanghai Environment Exchange will leverage their respective strengths and resources to strengthen domestic and international cooperation in the field of green finance. They will jointly conduct research to advance the development of green equity indices and equity‑based investment fund products; collaboratively refine capital‑market standards related to green finance, including guidelines for corporate carbon‑emission disclosure, methodologies, and capacity‑building initiatives; explore the design of derivative financial products based on carbon‑emission rights, pollution‑discharge rights, and other such instruments, thereby providing market‑oriented tools for investors to manage associated risks; and work to clarify criteria and scope for identifying green enterprises, facilitating their access to capital‑market financing.

The CPC Central Committee and the State Council: Initiate the establishment of the Xiong’an Equity Exchange and support the founding of a Capital Markets Institute.

The “Guiding Opinions on Supporting Hebei Xiongan New Area in Comprehensively Deepening Reform and Expanding Opening-Up,” issued yesterday by the CPC Central Committee and the State Council (hereinafter referred to as the “Opinions”), sets out policy measures covering a wide range of areas, including financial institutions, individual housing, corporate listings, mergers and acquisitions, reform of the housing provident fund system, and controls over cross-border capital flows.

In terms of financial support for Xiong’an, there are several key components:

1. Priority support will be given to eligible enterprises in the Xiong’an New Area for IPOs, mergers and acquisitions, equity transfers, bond issuances, and asset securitization. Exploration and promotion of innovative financial products, such as intellectual property securitization, will be encouraged in the Xiong’an New Area. Insurance companies will be encouraged to innovate and develop insurance products tailored to their needs, and a pilot program for cross‑regional business registration and management among insurance companies in the Beijing–Tianjin–Hebei region will be advanced.

2. Increase direct financing for Xiong’an by separately allocating a bond quota for the Xiong’an New Area, and support the issuance of general‑purpose and special‑purpose bonds with maturities of 10 years or longer to fund Xiong’an’s development. At the same time, assist China Xiong’an Group Co., Ltd. in enhancing its market‑oriented financing capabilities, standardize the use of socialized and market‑based fundraising mechanisms, and strictly prohibit financial institutions from providing unauthorized financing to the Xiong’an New Area.

3. Uphold the principle that housing is for living in, not for speculation; implement the requirement of work–residence balance; and ensure that residents of the Xiongan New Area have access to adequate housing. In response to diverse housing needs, establish a housing system featuring multi‑stakeholder supply, diversified channels of support, and a combination of rental and purchase options, with shared‑ownership housing as the mainstay for privately owned units. Large‑scale development of commercial real estate is strictly prohibited; surrounding housing prices are tightly controlled; and speculative activities involving land and property are rigorously prevented.

4. Conduct research to establish financial infrastructure, including a financial asset trading platform; initiate the establishment of the Xiong’an Equity Exchange; and support pilot programs for innovative financing models such as equity crowdfunding. Support the founding of a Capital Markets Academy in Xiong’an to cultivate high-caliber financial professionals. Study the possibility of setting up a branch of the People’s Bank of China in the Xiong’an New Area, advance comprehensive and functional reforms of the financial regulatory system, explore the development of a financial regulatory framework aligned with international standards, strengthen coordinated regulation of both domestic and foreign currencies, achieve full‑coverage oversight of all financial activities in the Xiong’an New Area, and officely safeguard against systemic and regional financial risks.

5. Support the establishment of internationally recognized arbitration, certification, and appraisal institutions in the Xiongan New Area. Expand areas of cooperation between Chinese and foreign financial markets, and apply unified management to both domestic and foreign investment for matters not covered by the negative list in the financial sector. Relax controls on the cross-border flow of foreign exchange funds, facilitate investment, financing, and foreign-exchange transactions in the Xiongan New Area, and steadily advance the convertibility of the RMB under the capital account.

6. Support the participation of various domestic and international investors in the development of the Xiongan New Area, while fully safeguarding the legitimate rights and interests of investors. Strengthen innovation and application in supply chains, launch pilot programs for innovative development of trade in services, and support the establishment of comprehensive cross-border e‑commerce pilot zones. Build a globally oriented digital trade platform to facilitate cross-border payments and settlements. Encourage the establishment of wholly foreign‑owned or Sino‑foreign joint‑venture financial institutions in the Xiongan New Area, and, where conditions permit, promptly relax or eliminate restrictions on equity ownership ratios.

7. Support the relocation of headquarters and branch offices of state-owned enterprises based in Beijing to the Xiong’an New Area, thereby promoting the optimization of the state‑owned economic structure, structural adjustment, and strategic restructuring during the process of capacity reduction, enhancing the preservation and appreciation of state assets, and strengthening, improving, and expanding state capital.

8. Strengthen tax policy guidance to facilitate the relocation of Beijing-based enterprises to the Xiong’an New Area, and accelerate the transfer and establishment in Xiong’an of Beijing’s high-tech enterprises that align with the New Area’s functional positioning. For tax policies that require phased implementation or pilot programs, those that are consistent with Xiong’an New Area’s actual conditions and functional priorities shall be supported for priority implementation or piloting within the New Area.

9. Innovate investment and financing mechanisms to attract diverse social entities to participate in housing development and construction in the Xiong’an New Area; support the growth of professional, institutionalized housing‑rental enterprises; promote the issuance of real estate investment trusts (REITs) and other innovative real estate financial products; establish clear management systems and operational frameworks; and explore tax policies tailored to these initiatives. Additionally, support the establishment of policy‑oriented residential finance institutions in the Xiong’an New Area and pilot reforms of the housing provident fund system.

10. Increase the level of central government transfer payments and Hebei provincial fiscal support during the initial construction phase to ensure the smooth operation of the Xiongan New Area, and gradually achieve fiscal self-sufficiency for the New Area. Coordinate and allocate other transfer payments to finance infrastructure development and maintenance in Xiongan, inject capital into industrial funds, cover interest expenses on local government debt, and provide support for transportation, water conservancy, scientific and technological innovation, ecological protection and restoration, and public services in Xiongan and its surrounding areas.

Give priority support to Xiong’an enterprises in issuing and listing, as well as in mergers and acquisitions and restructuring.

The “Opinions” outline a total of 35 key tasks, covering such areas as diversified funding mechanisms, innovation in tax policies, and enhanced fiscal support.

With regard to mobilizing funding through multiple channels, the Opinions stipulate that direct financing support for the Xiongan New Area should be strengthened, and a long-term, stable mechanism for raising construction funds should be established. While ensuring that government debt risks remain generally under control and resolutely curbing the growth of local governments’ implicit debt, greater support will be provided for the issuance of local government bonds, with a separate bond quota allocated to the Xiongan New Area to facilitate the issuance of general‑purpose and special‑purpose bonds with maturities of 10 years or longer. Efforts will be made to enhance China Xiongan Group Co., Ltd.’s market‑oriented financing capabilities, promote the standardized use of socialized and market‑based fundraising methods, and strictly prohibit financial institutions from providing financing to the Xiongan New Area in violation of regulations. Eligible enterprises in the Xiongan New Area will receive priority support for IPOs, mergers and acquisitions, equity transfers, bond issuances, and asset securitization. The New Area will also be encouraged to explore and pilot innovative financial products, such as intellectual property securitization. Insurance companies will be urged to innovate and develop insurance products tailored to specific needs, and a pilot program will be launched to streamline cross‑regional business registration and management for insurers operating in the Beijing–Tianjin–Hebei region.

Promote the orderly aggregation of financial resources. Attract private-sector financial institutions based in Beijing to establish operations in the Xiong’an New Area. Support the establishment of Xiong’an Bank and increase support for major infrastructure projects in the New Area, as well as for enterprises relocating there. Conduct research on the development of financial infrastructure, including a financial‑asset trading platform, and initiate preparations for the Xiong’an Equity Exchange, while piloting innovative financing models such as equity crowdfunding. Advance the early implementation in the Xiong’an New Area of cutting-edge research findings in the fintech field, and build a high‑standard, high‑tech Xiong’an Fintech Center. Encourage banking and financial institutions to strengthen cooperation with external investment entities and expand relevant business activities in the New Area. Support the establishment of a Capital Markets Academy in Xiong’an to cultivate a pool of highly qualified financial professionals. Study the possibility of setting up a branch of the People’s Bank of China in the Xiong’an New Area, advance comprehensive and functional reforms of the financial regulatory system, explore the creation of a financial regulatory framework aligned with international standards, enhance coordinated regulation of both domestic and foreign currencies, achieve full coverage of all financial activities in the New Area, and officely safeguard against systemic or regional financial risks.

With regard to fiscal support, the Opinions stipulate that central government transfer payments and Hebei Province’s provincial-level fiscal contributions will be increased during the initial construction phase to ensure the smooth operation of the Xiongan New Area, with the goal of gradually achieving fiscal self-sufficiency. Other transfer payments will be coordinated and allocated to finance infrastructure development and maintenance in the Xiongan New Area, inject capital into industrial funds, cover interest expenses on local government debt, and provide support for transportation, water conservancy, scientific and technological innovation, ecological protection and restoration, as well as public services in the Xiongan New Area and its surrounding regions.

At the same time, we will advance innovation in tax policies. We will strengthen policy guidance to encourage Beijing‑based enterprises to relocate to the Xiong’an New Area, and facilitate the accelerated relocation of Beijing’s high‑tech enterprises that align with the New Area’s functional positioning. For tax policies that require phased implementation or pilot programs, those that are consistent with the actual conditions and functional priorities of the Xiong’an New Area will be supported for priority implementation or piloting there.

Strictly control surrounding housing prices and rigorously guard against speculative activities in land and real estate.

The “Opinions” propose establishing a new housing supply system. Upholding the principle that housing is for living in, not for speculation, they call for implementing the requirement of work–residence balance and ensuring that residents of the Xiongan New Area have access to adequate housing. To address multi‑tiered housing needs, a housing system will be put in place featuring diversified supply from multiple stakeholders, multiple channels of保障, and a combination of renting and purchasing; among privately owned housing, shared‑ownership housing will be the mainstay. Large‑scale development of commercial real estate is strictly prohibited, surrounding housing prices are tightly controlled, and speculative activities involving land and property are rigorously curbed. Land‑supply policies will be formulated to align with the housing system and suit prevailing development and construction approaches, while refining diversified models of land use and supply, including outright transfers, leasing, combined lease‑and‑transfer arrangements, mixed‑use land allocations, and contributions of land value in exchange for equity stakes. Different registration regimes for real estate under various land‑supply mechanisms will be explored, and an innovative points‑based system for home purchase and rental will be introduced. Investment and financing mechanisms will be innovated to attract diverse social entities to participate in housing development and construction in the Xiongan New Area, support the growth of professional, institutionalized housing‑rental enterprises, and promote the issuance of real estate investment trusts (REITs) and other real estate‑related financial products. Clear management frameworks and operational procedures will be established, and tax policies tailored to these initiatives will be explored. Furthermore, the establishment of policy‑oriented residential financial institutions in the Xiongan New Area will be supported, and reforms of the housing provident fund system will be pursued.

In the realm of land management, efforts are underway to advance “integrated multi‑plan coordination,” delineating and strictly safeguarding three control lines—ecological protection redlines, permanent basic farmland, and urban development boundaries. Research is being conducted to establish a spatial planning framework for the Xiong’an New Area, strengthening the guiding and constraining role of territorial space planning over sector‑specific plans. A sound land expropriation system has been put in place, featuring standardized procedures, fair compensation, and diversified safeguards. The differentiated access regime for territorial space development and utilization has been refined, with the implementation of a negative list for industrial access in the Xiong’an New Area. A full‑life‑cycle management system for land use has been established. Furthermore, a multifunctional, composite development model for construction land is being explored, and standards for construction land tailored to the characteristics of the Xiong’an New Area are being formulated. Mechanisms linking population to land and linking increments to stock have also been introduced, with the level of land conservation and intensive use incorporated into performance‑based accountability assessments.

Foreign-invested wholly-owned or Sino-foreign joint venture financial institutions may be established.

The Opinions state that efforts will be made to encourage the participation of both international and domestic capital in the development of the Xiong’an New Area, while fully safeguarding the legitimate rights and interests of investors. The document calls for strengthening supply-chain innovation and application, launching pilot programs for the innovative development of trade in services, and supporting the establishment of comprehensive cross-border e‑commerce pilot zones. It also emphasizes building a globally oriented digital trade platform to facilitate cross-border payments and settlements. Furthermore, it supports the establishment of wholly foreign‑owned or Sino‑foreign joint‑venture financial institutions in the Xiong’an New Area, and, where conditions are met, seeks to promptly relax or eliminate shareholding‑ratio restrictions. The Opinions permit the creation of project companies specializing in overseas equity investments and encourage eligible investors to set up overseas equity investment funds. In addition, they propose innovating the management model for domestic and foreign‑currency accounts, allowing multinational corporate headquarters to conduct centralized operations of domestic and foreign‑currency funds in the Xiong’an New Area.

Moreover, a new mechanism for further opening up will be established. A market environment characterized by the rule of law, international standards, and convenience will be fostered; pre-establishment national treatment combined with a negative list regime for foreign investment will be implemented; an institutional framework aligned with internationally accepted investment and trade rules will be put in place; and a fair‑competition system will be built. Support will be provided for the establishment in the Xiongan New Area of internationally recognized arbitration, certification, and appraisal authorities, and mechanisms for the diversified resolution of commercial disputes will be explored. Fiscal, scientific‑technological, and financial support policies applicable to enterprises operating in the Xiongan New Area will apply equally to both domestic and foreign‑invested enterprises. Areas of cooperation between Chinese and foreign financial markets will be broadened, with matters outside the financial sector’s negative list subject to unified management for both domestic and foreign investors. Restrictions on the cross‑border flow of foreign exchange will be relaxed, facilitating investment, financing, and foreign‑exchange transactions in the Xiongan New Area, and steadily advancing the convertibility of the RMB under the capital account. Benchmarking against international best practices, a “single window” for international trade will be developed, the construction of a “smart customs” system in the Xiongan New Area will be advanced, and the establishment of special customs supervision zones will be explored.

Support the relocation of state-owned enterprise headquarters to the Xiong’an New Area.

The Opinions clearly state that headquarters and branch offices of Beijing‑based state-owned enterprises will be supported in relocating to the Xiongan New Area. Through this relocation, efforts will be made to optimize the spatial layout of the state‑owned economy, adjust its structure, and carry out strategic restructuring, thereby preserving and enhancing the value of state assets and strengthening, improving, and expanding state capital. The asset management system will be refined, with a new regulatory mechanism for state‑owned assets in the New Area established, centered on capital management, and pioneering an effective corporate governance framework characterized by checks and balances, as well as flexible and efficient market‑oriented operating mechanisms. Adhering to the principle of categorized guidance—promoting mixed ownership where appropriate—the development of a mixed‑ownership economy will be advanced in a proactive yet prudent manner, fostering enterprise competitiveness. With the exception of those entities involved in vital sectors of the national economy or tasked with major special projects, state‑owned enterprises in the Xiongan New Area may, in principle, explore the development of mixed‑ownership models. Furthermore, various public institutions based in Beijing will be encouraged to relocate to the Xiongan New Area; during this process, institutional reforms will be accelerated to optimize functions and staffing structures, and to separate government administration from public service delivery, as well as to distinguish between public service and business operations.

The Opinions also emphasize the need to stimulate endogenous drivers of economic development in the Xiongan New Area. They call for supporting the New Area in attracting innovative, high‑growth technology enterprises relocating from Beijing, and for creating new mechanisms and models that foster the integrated development of the primary, secondary, and tertiary sectors. Strict industrial access standards will be enforced, a scientific assessment and justification mechanism for projects seeking to enter the New Area will be established, and a negative list of industries whose relocation is restricted or whose spatial layout is discouraged will be drawn up. Local traditional industries that align with the New Area’s positioning and development priorities will undergo modernization and upgrading, while outdated production capacity will be phased out in an orderly and effective manner. Existing research institutions and innovation platforms based in Beijing will be guided to relocate to the Xiongan New Area in an orderly fashion; newly established national-level science and technology innovation platforms, such as national laboratories and national technology innovation centers, will be prioritized for deployment in Xiongan. Support will also be provided for the construction of the Zhongguancun Science Park in Xiongan. Enterprises in the Xiongan New Area will be encouraged to collaborate with financial institutions, universities, research institutes, and upstream and downstream players in their respective industries to jointly establish industrial collaborative innovation communities, build industry‑specific innovation centers, and undertake major research initiatives in partnership. Beijing‑based universities and distinctive secondary vocational schools will be guided and supported to relocate to Xiongan through various means, including full relocations, the establishment of branch campuses, and joint educational ventures. Universities participating in the “Double First-Class” initiative will be encouraged to set up campuses in Xiongan, and a new university—Xiongan University—will be founded under novel mechanisms and models. Public service facilities, research infrastructure, and science‑and‑technology innovation platforms will be developed in a unified manner, with concerted efforts to build world‑class universities and first‑rate disciplines.

Commercial & Corporate

Five departments are advancing efforts to streamline business deregistration.

The State Administration for Market Regulation, the Ministry of Human Resources and Social Security, the Ministry of Commerce, the General Administration of Customs, and the State Taxation Administration recently issued the “Notice on Promoting the Facilitation of Enterprise Deregistration” (Guo Shi Jian Zhu [2019] No. 30).

Specifically, the tax authorities have introduced a service that waives the requirement to complete tax clearance procedures. Taxpayers who have never engaged in any tax-related matters, or who have engaged in such matters but have not yet obtained any invoices and owe no taxes (including late payment penalties) or fines, are exempt from filing tax clearance with the tax authorities and may instead directly apply to the market regulation authority for simplified deregistration.

Attachment: Notice on Promoting the Facilitation of Enterprise Deregistration (Guo Shi Jian Zhu [2019] No. 30)

To the People’s Governments of all provinces, autonomous regions, and municipalities directly under the central government:

In order to comprehensively implement the decisions and arrangements of the CPC Central Committee and the State Council on deepening the “delegation, regulation, and service” reform and transforming government functions, further advance commercial system reform, address the issue of enterprises facing difficulties in deregistration, and provide more convenient services for enterprises seeking to exit the market, with the approval of the State Council, the following matters are hereby notified:

I. General Requirements and Work Objectives

General requirements: Focusing on the “difficulties,” “pain points,” and “bottlenecks” in enterprise deregistration, we will adopt a problem‑oriented approach. On the basis of safeguarding market transaction order and security, we will further streamline the enterprise deregistration process, enhance the efficiency of administrative services, strengthen the principal responsibility of enterprises in the exit process, improve transparency and predictability in business procedures, elevate the overall user experience, and promote the healthy renewal and structural optimization of enterprises.

Work objectives: Reform and improve the enterprise deregistration system by further streamlining documentation, optimizing procedures, strengthening inter‑departmental information sharing and business coordination, and establishing a dedicated online service portal for enterprise deregistration. This will enable “one‑stop” online access to all deregistration services, with relevant departments providing “information sharing and synchronized guidance,” while enterprises can track the progress, status, and outcomes of each step through a single online platform. The initiative aims to deliver more convenient and efficient administrative services to law-abiding, trustworthy businesses, while reinforcing penalties and constraints on entities that violate laws or act in bad faith, thereby fostering a market environment that is more open, transparent, and user‑friendly. By March 1, 2019, all relevant departments shall complete the tasks of streamlining documentation and optimizing procedures to enhance the efficiency of enterprise deregistration; by September 1, 2019, local authorities shall finish establishing the online service portals for enterprise deregistration, achieving “one‑stop” online access to all deregistration services.

II. Main Tasks and Measures

(1) Strengthen information sharing and inter‑agency coordination, and implement a “one‑stop” online service for business deregistration. Local authorities shall, leveraging the integrated government service platform, establish dedicated online service sections for business deregistration, promote “information sharing and synchronized guidance” among relevant departments, and achieve a unified online deregistration process. After a company publishes its creditor notice through the National Enterprise Credit Information Publicity System, the market regulation authority will transmit information on the commencement of liquidation to the relevant departments. These departments will then provide synchronized guidance on the deregistration process, communicating via the platform their respective procedures, methods, and outcomes, enabling enterprises to access, in a single online portal, details on each stage, progress, and results, thereby enhancing the overall user experience. Localities are also required to use these online service sections to fully disclose, in a transparent manner, each department’s deregistration procedures, eligibility criteria, time limits, document requirements, and service locations, thus increasing policy transparency and predictability. (Led by the State Administration for Market Regulation; local governments and relevant departments shall assume responsibilities according to their respective duties.)

(2) Reform the enterprise registration and deregistration system, streamlining registration procedures and required documentation. Amend administrative regulations such as the Regulations on Company Registration Administration, along with their supporting provisions, to optimize the standard deregistration process. Abolish the requirement for enterprises to file the liquidation committee’s details with the company registration authority; instead, enterprises will publicly disclose liquidation committee information free of charge through the National Enterprise Credit Information Publicity System, eliminating the need to submit the four documents previously required for liquidation committee filing. To reduce business compliance costs, replace the newspaper‑publication requirement with a provision allowing enterprises to make free public announcements via the National Enterprise Credit Information Publicity System. Clarify that enterprise deregistration shall be subject to formal review: when applying for deregistration, enterprises will no longer be required to submit five documents, including the Filing Notice and newspaper proofs, but only four mandatory items, such as the Liquidation Report (detailed material requirements for each department are set out in Appendix 1). Further refine the simplified deregistration regime, piloting its extension to non‑listed joint-stock companies and farmer specialized cooperatives, reducing the publication period from 45 days to 20 days, and establishing a tolerance mechanism that permits enterprises whose simplified deregistration has been terminated to reapply under the prescribed procedures once they meet the eligibility criteria. (Responsible: State Administration for Market Regulation)

(3) Implement categorized processing for tax deregistration to accelerate the tax clearance process. Tax authorities shall provide a “no‑need‑to‑complete‑tax‑clearance‑procedures” service: taxpayers who have never engaged in tax‑related matters, or who have engaged in such matters but have not yet collected invoices and owe no taxes (including late payment penalties) or fines, will be exempt from completing tax‑clearance formalities at the tax authority and may directly apply to the market regulation department for simplified deregistration. Further optimize the instant‑processing service for tax deregistration: taxpayers with an A‑ or B‑level tax credit rating who are not under tax inspection, have no outstanding taxes (including late payment penalties) or fines, and have already cancelled their special VAT invoices and tax‑control equipment; M‑level taxpayers whose controlling parent company has an A‑level tax credit rating; enterprises founded by talents introduced by provincial people’s governments; individual business households subject to fixed‑amount taxation that have not been included in the tax credit rating assessment; and taxpayers whose turnover does not reach the VAT threshold—these entities may avail themselves of a “commitment‑based” approach allowing them to proceed with missing documents. Integrate all tax‑deregistration procedures, establish dedicated “deregistration windows,” strengthen the “first‑contact responsibility system,” and, based on each taxpayer’s specific circumstances, provide a one‑stop notification of all required actions and supporting documents. Adopt a “package‑style” service model to enhance taxpayers’ overall experience. Upon completion of tax deregistration, the tax authorities will transmit the tax‑clearance information to the market regulation authorities, thereby reducing the need to submit additional documentation and expediting the deregistration process. (The State Taxation Administration is responsible.)

(4) Streamline registration and deregistration procedures for social security, commerce, customs, and other agencies to reduce business compliance costs. The human resources and social security authorities, based on enterprise deregistration information shared through the integrated government service platform, will simultaneously process the cancellation of social security registrations for enterprises with no outstanding social security contributions. The commerce authorities, when handling matters related to the early dissolution of foreign-invested enterprises, will further optimize workflows and streamline required documentation. After all customs formalities have been completed, customs will, in accordance with the law, proactively cancel registered filings without requiring applicants to submit additional materials; applicants seeking to cancel their customs registration need only submit a single application for deregistration. (The Ministry of Human Resources and Social Security, the Ministry of Commerce, the General Administration of Customs, and other relevant departments shall assume responsibilities according to their respective duties.)

(5) Develop tailored solutions for specific issues and strengthen administrative guidance. Local authorities shall, in accordance with the provisions and guidelines set forth in the “Guidance on Enterprise Deregistration” (Attachment 2), effectively address special circumstances—such as shareholders being unreachable or business licenses being lost—that prevent enterprises from completing deregistration procedures, thereby resolving the various practical challenges they face during the process. (Each region and relevant department shall assume responsibility according to their respective duties.)

(6) Strengthen credit management and improve the joint punishment system. Officely enforce the principal responsibility of enterprises, and, in accordance with the law, impose departmental joint sanctions on market entities that have lost trust, thereby preventing malicious evasion of debt. For enterprises that conceal the true situation or engage in fraud during deregistration, the market regulation authorities shall, in accordance with the law, include them on the List of Seriously Illegal and Untrustworthy Enterprises and publicly disclose this information through the National Enterprise Credit Information Publicity System. With respect to enterprises that obtain tax deregistration under a “commitment-based” deficiency‑acceptance procedure but fail to complete the relevant tax‑related matters within the promised time limit, the tax authorities shall record such untrustworthy conduct in the personal credit records of the enterprise’s legal representative and financial officer. Accelerate efforts to explore the establishment of a mandatory liquidation system and refine the procedures for enterprise deregistration. (Led by the State Administration for Market Regulation; relevant departments shall assume responsibilities according to their respective duties.)

III. Ensure the Effective Implementation of Relevant Responsibilities

(1) Strengthen the implementation of responsibilities. Local people’s governments shall effectively streamline working mechanisms, coordinate and advance the development of relevant information systems, and ensure the achievement of objectives for enterprise deregistration. The market regulation authorities shall take the lead in facilitating enterprise deregistration, promote the revision of pertinent administrative regulations, and optimize the dedicated online service portal for enterprise deregistration; the tax authorities shall be responsible for enhancing the user experience in settling outstanding tax liabilities.

(II) Strengthen publicity and training. All regions and relevant departments should intensify efforts to publicize and explain policies related to enterprise deregistration, enhance professional training, ensure that all concerned personnel have a thorough understanding of the specific measures in place, improve the quality of services for enterprise deregistration, and effectively address the practical difficulties enterprises encounter during the process. Furthermore, they should step up outreach on applicable laws and regulations, enabling enterprises to clearly understand their legal obligations and social responsibilities when undergoing deregistration and delisting.

(3) Strengthen oversight and implementation. The State Administration for Market Regulation shall, in coordination with relevant departments, intensify guidance and coordination on measures to facilitate business deregistration and promptly communicate pertinent updates. Local people’s governments shall clearly define tasks, refine specific measures, and work jointly to ensure effective oversight and implementation of business deregistration procedures.

China Banking and Insurance Regulatory Commission: Allows insurance institutions to invest in perpetual capital bonds.

On the evening of January 24, the China Banking and Insurance Regulatory Commission issued a notice stating that, to help commercial banks further strengthen their capital base, optimize their capital structure, expand their capacity to extend credit, enhance their ability to serve the real economy and withstand risks, and diversify the allocation of insurance funds, the CBIRC will permit insurance institutions to invest in eligible bank secondary capital bonds and perpetual capital bonds.

The China Banking Association has issued the financial leasing industry’s first self-regulatory code.

Recently, the Financial Leasing Professional Committee of the China Banking Association (hereinafter referred to as the “Financial Leasing Committee”) unveiled in Beijing the financial leasing industry’s first self-regulatory code—the “Self-Regulatory Code of the Chinese Financial Leasing Industry” (hereinafter referred to as the “Self-Regulatory Code”).

The Self‑Regulatory Covenant sets forth provisions covering compliance with laws and regulations, the development of business systems, corporate strategic planning, and the management of industry practitioners. Key elements include adherence to legal and regulatory requirements, strict observance of business ethics, adherence to industry self‑regulation principles, strengthening internal control frameworks, formulating strategic development plans, establishing a sound pricing mechanism, instituting a system for managing related‑party transactions, creating an appraisal and valuation framework for leased assets, reducing the proportion of sale‑and‑leaseback transactions, and enhancing self‑discipline, oversight, and professional training for all member institutions’ personnel. The issuance of this Self‑Regulatory Covenant will further promote law‑based, compliant operations across the industry, safeguard a rational, orderly, and fair‑competition market environment for the financial leasing sector, establish industry‑wide mechanisms for restraint and supervision, and advance the high‑quality development of the financial leasing industry.

The Self‑Regulatory Covenant stipulates that internal control culture must be strengthened, a rigorous compliance framework, performance‑evaluation system, and performance‑assessment mechanism should be established, and corporate governance and internal control mechanisms continuously refined. It also calls for enhancing comprehensive risk‑management capabilities and formulating proactive, feasible preventive measures to address credit risk, liquidity risk, market risk, operational risk, and moral hazard. Furthermore, a system for holding individuals accountable for major incidents shall be put in place, comprehensive incident‑management efforts shall be deepened, and a long‑term mechanism for preventing and mitigating case‑related risks shall be established, thereby ensuring the safe and sound operation of financial leasing companies.

With regard to business standards, the Self‑Regulatory Covenant stipulates that, in order to continuously enhance the capacity and quality of financial services in supporting the real economy, the proportion of sale-and-leaseback transactions should be gradually reduced. When engaging in sale-and-leaseback activities, the leased asset must be genuinely owned by the lessee and subject to the lessee’s lawful disposal rights. The purchase price of the leased asset shall be based on a reasonable valuation that complies with accounting standards; underpricing and overpricing are prohibited.

Personnel management is also a top priority. According to the Self‑Regulatory Covenant, it is essential to strengthen the management of industry professionals and uphold a fair competitive environment. During the recruitment process, all relevant laws must be strictly observed, established procedures rigorously followed, and background checks conducted in a reasonable and lawful manner, with robust recruitment and hiring management in place. It is prohibited to hire individuals who have not yet legally terminated their employment contracts with their previous employers, as well as any other persons whom the law expressly forbids from being hired. Furthermore, orderly and legitimate personnel mobility should be supported and promoted.

A financial leasing company is a non-bank financial institution primarily engaged in the business of financial leasing, approved by the China Banking Regulatory Commission. Since 2007, when the CBRC launched a pilot program allowing commercial banks to establish financial leasing companies, China’s financial leasing sector has gradually gotten on track and embarked on a path of healthy, rapid development. As of the end of September 2018, a total of 66 financial leasing companies were in operation nationwide, with the industry’s total assets exceeding RMB 2.5 trillion.

The Financial Leasing Professional Committee of the China Banking Association (hereinafter referred to as the “Financial Leasing Committee”) was established on July 6, 2009. It is a professional and authoritative national financial leasing organization founded to strengthen industry cooperation, promote orderly competition, and safeguard financial leasing transactions. Financial leasing companies approved by the China Banking Regulatory Commission, as well as other enterprises and institutions related to financial leasing, may apply for membership in the Financial Leasing Committee upon joining the China Banking Association. At present, the Financial Leasing Committee has 64 member institutions.

Two departments: Supporting the green development of private enterprises

Recently, the Ministry of Ecology and Environment and the All-China Federation of Industry and Commerce jointly issued the “Opinions on Supporting and Facilitating the Green Development of Private Enterprises” (hereinafter referred to as the “Opinions”).

The “Opinions” call for the improvement of market access mechanisms. They urge the establishment of robust market‑entry frameworks, the dismantling of regional barriers, and the standardization of market order. Specifically, they recommend formulating scientifically sound and reasonable tendering and procurement criteria for government‑funded projects in the ecological and environmental sectors, further reducing market‑access restrictions on social capital, and eliminating unreasonable constraints imposed at stages such as bidding. This will help remove entry barriers that hinder private enterprises from participating in major governance projects aimed at winning the battle against pollution. Moreover, the document advocates actively promoting the public–private partnership (PPP) model in the ecological and environmental fields, encouraging the creation of third‑party guarantee and payment platforms for PPP projects and for environmental‑governance initiatives undertaken by governments and state‑owned enterprises. It also calls for local governments and state‑owned enterprises to fulfill their contractual obligations strictly in accordance with the law, thereby preventing delays in payments to private offices for environmental protection projects.

NDRC: Banks are encouraged to extend medium- and long-term loans to private enterprises, and market access will be further relaxed.

On the 22nd, the National Development and Reform Commission held a press conference, during which spokesperson Meng Wei fielded questions from reporters on the state of macroeconomic performance.

Meng Wei pointed out that bond financing, as a direct‑financing instrument, plays a crucial role in alleviating the financing challenges faced by private enterprises, particularly small, medium, and micro‑sized offices. This year, the scale of bond issuance will be expanded, with a focus on increasing the issuance volume of high‑quality bonds by private enterprises, promoting innovation in bond products, and encouraging banks to extend medium- and long-term loans—especially those for advanced manufacturing—with maturities of three years or longer. He added that market access will be further relaxed, with efforts to open up the services sector, deepen opening-up in agriculture, mining, and manufacturing, and accelerate liberalization in telecommunications, education, healthcare, culture, and other fields, allowing wholly foreign‑owned operations in an expanding range of sectors.

Taxation TAXATATION

The State Taxation Administration is making every effort to ensure the effective implementation of tax and fee reduction policies.

The State Taxation Administration recently issued the “Notice on Thoroughly Implementing Policies and Measures for Tax and Fee Reductions” (Tax General Notice [2019] No. 13).

The Notice states that the State Taxation Administration, in coordination with relevant departments, will promptly conduct research to refine implementation plans for reducing the value-added tax rate and lowering social insurance contribution rates. Meanwhile, tax authorities at the provincial level are to work closely with fiscal departments to actively explore policy measures to reduce, by up to 50 percent, applicable local taxes and surcharges for small-scale VAT taxpayers.

Attachment: “Notice on Thoroughly Implementing the Policies and Measures for Tax and Fee Reductions” (Tax General Issuance [2019] No. 13)

To the tax bureaus of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan; to the Commissioner’s Offices of the State Taxation Administration stationed in various localities; and to all units within the Administration:
To thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council, ensure that tax and fee reduction policies and measures are effectively put into practice, and promote sustained and sound economic and social development, the following notice is hereby issued regarding relevant work:
I. Enhance ideological awareness and take proactive action.
Tax and fee reductions are a key measure for deepening supply-side structural reform, playing an important role in alleviating the burden on enterprises, boosting the vitality of market entities, and fostering economic growth. In recent years, the CPC Central Committee and the State Council have introduced and implemented a series of robust, substantive, and wide-ranging tax and fee reduction policies and measures, which have strongly promoted entrepreneurship and innovation and effectively advanced economic and social development. Continuing to strengthen these efforts—particularly by enhancing tax support for small and micro‑enterprises and the real economy—is vital for ensuring the sustained and stable operation of the economy and maintaining employment stability. It also holds great significance for seizing the critical period of strategic opportunities and achieving high‑quality economic development.
In recent years, tax authorities at all levels, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, have earnestly implemented various tax‑reduction and fee‑reduction policies, continuously improved taxpayer services, and made vigorous efforts to unlock the benefits of these measures and further optimize the tax‑related business environment, achieving notable results. However, it must also be recognized that downward pressure on China’s economy has intensified, particularly as the real economy continues to face numerous challenges, and society at large harbors high expectations for even more robust tax‑and‑fee cuts. What the people hope for is what the government strives to deliver. Accordingly, the CPC Central Committee and the State Council have decided to introduce larger‑scale tax‑reduction and fee‑reduction measures, and the State Council Executive Meeting recently unveiled a package of universal tax‑relief policies aimed at small and micro enterprises. Tax authorities at all levels must ensure that their thinking and actions are fully aligned with the decisions and arrangements of the CPC Central Committee and the State Council, approaching this task from the standpoint of political awareness and with a view to sustaining sound economic development and overall social stability. They should further strengthen their sense of political responsibility and proactiveness in implementing these measures, ensuring that all policies and initiatives are carried out rigorously and without compromise, so that businesses and the general public can truly feel the tangible benefits.
II. Strengthen leadership effectively and ensure rigorous implementation of responsibilities.
All tax authorities at every level must, in accordance with the arrangements set forth at the National Tax Work Conference, make the effective implementation of tax and fee reduction policies and measures the central theme of this year’s tax work, placing it at the highest priority. They should engage in coordinated planning, meticulous deployment, and swift action, officely shouldering this responsibility and ensuring that this task is carried out to the letter. The State Taxation Administration has established a Leading Group for Implementing Tax and Fee Reductions, with subordinate working groups—including an Office (led by the Revenue Planning and Accounting Department), a Policy Formulation Group (led by the Policy and Regulations Department), a Collection and Management & Accounting Group (co‑led by the Revenue Planning and Accounting Department and the Collection and Management and Science & Technology Development Department), an Inspection and Supervision Group (led by the Inspection and Internal Audit Department), and a Service and Publicity Group (co‑led by the Taxpayer Services Department and the Tax Publicity Center)—to ensure the comprehensive and effective implementation of these policies and measures. All tax authorities at every level should likewise establish corresponding mechanisms to oversee implementation, with the principal leader assuming overall responsibility, assigning highly capable personnel to form dedicated teams, clearly defining accountability, compiling detailed task lists, adhering strictly to timelines, and rigorously aligning with established standards to carry out each task. This will ensure that all preparatory work prior to implementation, management and service during execution, and post‑implementation impact assessments are meticulously executed, yielding tangible and thorough results.
III. Expedite policy research and advance implementation at the earliest possible opportunity.
Building on the effective implementation of existing inclusive tax‑reduction policies and measures for small and micro enterprises, the State Taxation Administration is working closely with relevant departments to promptly refine implementation plans for lowering the value‑added tax rate and reducing social security contribution rates, striving to ensure that these measures are substantive and robust, enhance the scientific basis and inclusiveness of the policies, and facilitate their early promulgation and implementation. Tax authorities at the provincial level should coordinate with fiscal departments to actively explore policy options for reducing, within a 50% range, relevant local taxes and surcharges applicable to small‑scale VAT taxpayers; proactively seek guidance and report to the respective provincial people’s governments; issue operational guidelines in a timely manner as required; and ensure thorough follow‑up implementation, reporting relevant developments to the State Taxation Administration without delay. Tax authorities below the provincial level should closely monitor the implementation of inclusive tax‑reduction policies and measures for small and micro enterprises, improve mechanisms for providing feedback on tax policy enforcement, and promptly identify and communicate any issues or suggestions arising during implementation. Furthermore, with a focus on further intensifying tax and fee reductions, they should conduct in‑depth research and surveys, and proactively put forward practical, concise, and easily implementable recommendations to continuously refine these policies and measures, thereby enhancing their effectiveness and delivering more tangible benefits to taxpayers.
IV. Strengthen publicity and guidance to effectively manage expectations.
Tax authorities at all levels should focus on ensuring that tax and fee reduction policies and measures are widely known and readily accessible to taxpayers and payers. They must intensify publicity and guidance efforts, enabling market entities to genuinely experience the substantial impact of the Party Central Committee and the State Council’s tax and fee reduction initiatives, thereby bolstering confidence, stimulating vitality, and fostering stable, positive expectations across society. Innovative approaches and enhanced efforts are required to conduct multi-channel, broad‑coverage outreach on these policies through tax authority websites, WeChat, Weibo, mobile apps, the 12366 taxpayer service hotline, and printed informational materials. The State Taxation Administration will organize specialized briefings—delivered directly to the tax system as well as to taxpayers and payers—via policy‑interpretation video conferences and other formats, ensuring end‑to‑end implementation of relevant policies. Furthermore, tax and fee reductions will be a central theme of the 2019 Tax Publicity Month. Tax authorities below the provincial level should provide face-to-face policy guidance through taxpayer academies, on‑site assistance, and thematic presentations. Such guidance must achieve 100% comprehensive coverage while also delivering targeted, precision‑driven support; it should address both corporate finance personnel and legal representatives, explaining not only the substantive content of the policies but also procedural aspects such as tax filing and payment processes and the completion of tax return forms, helping taxpayers and payers clearly understand policy interpretations and eligibility criteria to ensure accurate comprehension and full benefit.
V. Optimize administrative services to enhance tax compliance convenience.
Tax authorities at all levels must officely uphold a taxpayer- and payer‑centered service philosophy and continuously refine their administrative and service measures. The State Taxation Administration and tax authorities at all levels should conduct in-depth research and continually optimize measures to facilitate taxpayers’ and payers’ access to tax and fee reduction policies: streamline procedures wherever possible, simplify documentation to the greatest extent feasible, and promptly implement initiatives such as expanding the scope of filing‑to‑record‑keeping for tax incentives, accelerating the review and elimination of tax‑related certification requirements, and advancing list‑based management of tax‑related documents, thereby ensuring that these policies are implemented more effectively and with greater efficiency. Tax authorities below the provincial level should, in light of local conditions, proactively introduce innovative administrative and service measures, fully leveraging functions such as computer‑assisted identification, policy guidance, standardized assessment, and support for tax (and fee) calculation, so as to further enhance taxpayers’ and payers’ positive experience in benefiting from tax and fee reduction policies. In strict accordance with the State Taxation Administration’s directives, robust measures must be taken to comprehensively and accurately collect basic information on taxpayer size, tax types, industries, economic sectors, and other relevant factors, ensuring high‑quality baseline data and strengthening the targeted nature of administrative and service delivery. Competent tax authorities should promptly review taxpayers’ submitted returns, provide guidance to ensure accurate reporting, and continuously improve the quality of tax‑exemption and reduction filings. Tax service halls must fully implement all service mechanisms—such as the first‑contact responsibility system, time‑limited processing, appointment‑based services, extended operating hours, tax‑guidance services, and the “at most one visit” principle—to ensure timely responses to taxpayers’ and payers’ inquiries and prompt handling of their matters, thereby delivering greater convenience and satisfaction and enhancing taxpayers’ and payers’ sense of gain.
At present, tax authorities at all levels should focus on better supporting the development of small and micro enterprises and ensuring the effective implementation of universal tax relief measures for them, while appropriately allocating taxpayer‑service resources. The State Taxation Administration has established a dedicated Small and Micro Enterprise Service Division to centrally receive and coordinate the resolution of tax‑related concerns raised by small, medium, and micro enterprises. Provincial tax authorities are also required to designate specialized departments and assign dedicated personnel to oversee services for these enterprises. Furthermore, taxpayer service halls should set up consultation desks to provide guidance on the implementation of preferential tax policies for small and micro enterprises, ensuring that their tax‑related concerns have a clear channel for submission, their questions are promptly addressed, and their matters are efficiently processed.
VI. Strengthen Statistical Accounting and Deepen Impact Analysis
Tax authorities at all levels must diligently carry out statistical accounting and impact analysis of the implementation of tax and fee reduction policies and measures, ensuring that they have a clear grasp of the situation and maintain transparent records. The State Taxation Administration will establish and improve statistical accounting procedures for the implementation of universal tax relief measures for small and micro enterprises, starting with standardizing statistical accounting criteria across all levels, regions, tax types, and policy items. It will build a top-down, unified, and streamlined statistical accounting and analytical system covering all stages—data collection from returns, review and validation, aggregation and reporting, and accounting and analysis—continuously enhancing the comprehensiveness, accuracy, and timeliness of such accounting. This will ensure the timely generation of tax‑reduction and exemption statistics, providing an objective reflection of their effectiveness. Provincial tax authorities should conduct routine joint reviews of tax‑reduction and exemption data to comprehensively improve the quality and timeliness of these statistics; they should also proactively assess the implementation of tax‑reduction policies and promptly report on policy performance and economic impact analyses. Furthermore, they should optimize and refine the statistical accounting functions of the tax administration system, taking special care during statistical reporting to avoid imposing unnecessary burdens on taxpayers. Any data that can be extracted from return forms or generated by the system must not be required to be reported separately by taxpayers.
VII. Actively seek support and build synergy in our work.
Implementing tax and fee reductions requires the active participation and concerted efforts of all stakeholders. Tax authorities at all levels should strengthen reporting to local Party committees and governments and enhance communication with finance departments and other relevant agencies, striving to ensure that local budget‑making and adjustment processes fully take into account the implementation of these policies and appropriately set tax and fee revenue targets. They should proactively brief relevant oversight bodies on the progress of policy implementation, seek guidance, and diligently refine their work to secure broad understanding and support. At present, in line with the requirement that the universal tax relief measures for small and micro enterprises take effect as of January 1, 2019, it is essential to intensify coordination with finance departments, the People’s Bank of China, and other relevant entities, and to ensure the timely refund of taxes already paid by taxpayers.
VIII. Strengthen oversight and evaluation to ensure effective implementation and lasting results.
All tax authorities at every level, on the basis of coordinated and standardized oversight, inspection, and performance assessment, shall incorporate the implementation of universal tax relief measures for small and micro enterprises into their performance management systems. They should scientifically design evaluation indicators, rigorously carry out assessments and follow-up, and, through enforcement inspections and other means, ensure that tax and fee reduction policies are effectively implemented. In the first half of 2019, the State Taxation Administration will focus on monitoring the implementation of universal tax relief policies for small and micro enterprises and organize supervisory inspections of tax and fee reduction efforts. Tax authorities below the provincial level must also cascade pressure and assign responsibilities at each tier, ensuring thorough implementation at every level. They should strengthen oversight of the implementation of universal tax relief and related policies for small and micro enterprises within their jurisdictions, conducting comprehensive, end-to-end inspections with no blind spots. Any issues identified during policy implementation must be addressed openly and without evasion; matters requiring reporting should be promptly and fully communicated, solutions to be swiftly studied and resolved, and corrective actions taken immediately upon identification. At the same time, tax authorities should actively cooperate with relevant departments in their inspection activities, truthfully report circumstances, voluntarily accept oversight, and promote the effective implementation and sustained impact of all tax and fee reduction policies.
IX. Uphold strict work discipline to ensure the quality and effectiveness of our work.
Tax authorities at all levels must officely uphold the principle that effectively implementing tax and fee reduction policies and measures is a critical task. They should prioritize discipline and compliance, enforce strict work requirements, and assume full responsibility to ensure that all such policies and measures are implemented precisely and without compromise, enabling taxpayers and payers to “be fully informed, fully capable, and fully entitled to benefits.” Units and individuals that fail to adequately implement policies, inadequately scrutinize statistical data, or commit significant oversights in publicity, guidance, administration, or service—thereby causing adverse consequences—shall be held strictly accountable in accordance with regulations and disciplinary rules, so as to ensure, through the most rigorous discipline, that the Party Central Committee and the State Council’s decisions and arrangements on tax and fee reductions are enforced with the utmost rigor.

Four departments have clarified the income tax policy for individual partners of venture capital enterprises.

The Ministry of Finance, the State Taxation Administration, the National Development and Reform Commission, and the China Securities Regulatory Commission recently issued the “Notice on Income Tax Policies for Individual Partners of Venture Capital Enterprises” (Cai Shui [2019] No. 8), which will be effective from January 1, 2019, to December 31, 2023.

The Notice clarifies that venture capital offices may elect to be taxed either on a per‑fund basis or on an annual‑aggregate basis, and once elected, this choice cannot be changed within three years. Under the per‑fund option, the personal partners’ share of capital gains from equity transfers and dividend income derived from such funds is subject to individual income tax at a rate of 20%. Under the annual‑aggregate option, the personal partners’ income from the venture capital office is taxed as “business income” at progressive rates ranging from 5% to 35%.

Attachment: “Notice on the Income Tax Policy for Individual Partners of Venture Capital Enterprises” (Cai Shui [2019] No. 8)

To the Finance Departments (Bureaus), Development and Reform Commissions, and Securities Regulatory Authorities of all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan; to the Tax Bureaus of the State Taxation Administration in all provinces, autonomous regions, municipalities directly under the central government, and cities separately listed in the national plan; and to the Finance Bureau and Development and Reform Commission of the Xinjiang Production and Construction Corps:

To further support the development of venture capital enterprises (including venture capital funds, hereinafter collectively referred to as “venture capital enterprises”), the relevant personal income tax policy issues are hereby notified as follows:

I. Venture capital enterprises may, at their discretion, elect to compute the individual income tax liability of their individual partners on the basis of either a single‑fund accounting method or an annual‑aggregate accounting method for the enterprise’s total income.

For the purposes of this notice, “venture capital enterprises” refer to partnership‑type venture capital enterprises (funds) that comply with the relevant provisions on venture capital enterprises (funds) set forth in the Interim Measures for the Administration of Venture Capital Enterprises (Order No. 39 of the National Development and Reform Commission and nine other departments) or the Interim Measures for the Supervision and Administration of Private Investment Funds (CSRC Order No. 105), have completed the required filing in accordance with such provisions, and operate in a standardized manner.

II. Where a venture capital enterprise elects to be taxed on a per‑fund basis, the individual partners’ share of capital gains from equity transfers and dividend income derived from that fund shall be subject to individual income tax at a rate of 20%.

Where a venture capital enterprise elects to compute its annual income on an aggregate basis, the individual partners’ income derived from such enterprise shall be subject to individual income tax under the “business income” category, calculated and paid at progressive tax rates ranging from 5% to 35%.

III. Single‑fund accounting refers to the practice whereby a single investment fund (including venture capital enterprises not established in the form of a fund) separately calculates and taxes, on an annual basis, gains from equity transfers and dividend income derived from various venture‑capital investment projects, using the methods set forth below:

(1) Gains from equity transfers. For an individual investment project, gains from equity transfers are calculated as the balance remaining after deducting the original cost of the equity and reasonable transfer‑related expenses from the annual equity transfer income. The methods for determining the original cost of the equity and the reasonable transfer‑related expenses shall be applied in accordance with the relevant policies governing personal income tax on gains from equity transfers. For a single investment fund, gains from equity transfers are calculated as the net balance after offsetting gains and losses arising from different investment projects within a tax year; if the balance is greater than or equal to zero, it is recognized as the fund’s annual gain from equity transfers; if the balance is negative, the fund’s annual gain from equity transfers is deemed to be zero and may not be carried forward to the next year.

Individual partners shall calculate their tax liability based on the share of annual capital gains from equity transfers attributable to them, and the venture capital enterprise shall withhold and remit the corresponding individual income tax by March 31 of the following year. Where the conditions set forth in the “Notice of the Ministry of Finance and the State Taxation Administration on Relevant Tax Policies for Venture Capital Enterprises and Angel Investors” (Cai Shui [2018] No. 55) are met, individual partners of venture capital enterprises may deduct 70% of the investment amount corresponding to the transferred project from their share of the annual capital gains before calculating their tax liability; any shortfall in the current period may not be carried forward to subsequent years.

(2) Dividend and bonus income. For a single‑fund investment, dividend and bonus income is calculated in full based on the total amount of dividends, bonuses, and other fixed‑income securities received from distributions of its invested projects.

Individual partners calculate their tax liability based on the share of dividend and bonus income they are entitled to receive from the fund, and the venture capital enterprise withholds and remits the individual income tax on a per‑transaction basis.

(3) Except for the costs and expenses deductible as set forth above, any other expenditures incurred by a single investment fund, including management fees and performance-based compensation paid to the investment fund manager, shall not be deductible for accounting purposes.

The single-fund accounting method prescribed in this article applies solely to the calculation of the tax liability of individual partners in venture capital enterprises.

IV. The annual aggregate income calculation for venture capital enterprises refers to determining the income attributable to individual partners by deducting costs, expenses, and losses from the enterprise’s total revenue for each tax year. Where the conditions set forth in the “Notice of the Ministry of Finance and the State Taxation Administration on Relevant Tax Policies for Venture Capital Enterprises and Angel Investors” (Cai Shui [2018] No. 55) are met, individual partners of such enterprises may first deduct 70% of the investment amount corresponding to the transferred project from their share of the venture capital enterprise’s business income, and then calculate their taxable amount accordingly. If the annual calculation results in a loss, such loss may be carried forward to subsequent years in accordance with the relevant provisions.

Individual partners taxed under the “business income” category, who have no comprehensive income, may, in accordance with the law, deduct the basic deduction, special deductions, special additional deductions, and other deductions as determined by the State Council. Where business income is derived from multiple sources, personal income tax shall be computed on a consolidated basis, with the aforementioned deductions and allowances applied only once.

V. Once a venture capital enterprise has elected to be taxed either on a per‑fund basis or on the basis of its annual aggregate income, such election may not be changed within three years.

VI. Venture capital enterprises that elect to be accounted for on a per‑fund basis shall, within 30 days of completing the filing required under Article 1 of this Notice, file with the competent tax authority their chosen accounting method. Failure to file as prescribed shall be deemed an election to account for the enterprise’s annual income on an aggregate basis. For venture capital enterprises that had already completed the required filing prior to January 1, 2019 and opt to be accounted for on a per‑fund basis, such filing must be made with the competent tax authority no later than March 1, 2019. If a venture capital enterprise has elected a particular accounting method and wishes to make a change after three years, it shall refile with the competent tax authority no later than January 31 of the year following the completion of the three‑year period.

VII. Tax authorities, in accordance with the law, shall carry out tax collection and administration as well as subsequent management. They may request the development and reform authorities and the securities regulatory authorities to verify whether venture capital enterprises and their invested projects comply with relevant regulations; the development and reform authorities and the securities regulatory authorities shall cooperate accordingly.

VIII. The period of validity of this Notice shall be from January 1, 2019, to December 31, 2023.

The State Taxation Administration has clarified the administration and collection issues related to the VAT exemption for small-scale taxpayers.

The State Taxation Administration recently issued the “Announcement on Relevant Administration Issues Concerning the Policy of Exempting Small-Scale Taxpayers from Value-Added Tax” (State Taxation Administration Announcement No. 4 of 2019), along with accompanying explanatory notes.

It is clarified that taxpayers shall combine the sales revenue from all VAT‑taxable transactions—including the sale of goods, labor services, services, intangible assets, and real estate—to determine whether the threshold for tax exemption has been met. Meanwhile, if a small‑scale taxpayer’s sales revenue, after deducting the sales proceeds from real estate sold during the current period, still does not exceed RMB 100,000, the sales revenue derived from goods, labor services, services, and intangible assets shall be eligible for the small‑scale taxpayer tax exemption.

Attachment: “Announcement on Relevant Administration and Collection Issues Concerning the Policy of Exempting Small-Scale Taxpayers from Value-Added Tax”

In accordance with the provisions of the “Notice of the Ministry of Finance and the State Taxation Administration on Implementing Universal Tax Relief Policies for Small and Micro Enterprises” (Cai Shui [2019] No. 13), the following administrative issues concerning the policy exempting small-scale taxpayers from value-added tax on monthly sales of RMB 100,000 or less (inclusive) are hereby announced:
1. Small-scale taxpayers whose aggregate monthly sales from taxable VAT‑subject transactions do not exceed RMB 100,000 (or, for those with a quarterly tax period, whose quarterly sales do not exceed RMB 300,000; the same applies hereinafter) are exempt from VAT.
For small-scale taxpayers, if the aggregate monthly sales amount from VAT‑taxable sales exceeds RMB 100,000 but, after deducting the sales revenue from real estate transactions in the current period, the remaining amount does not exceed RMB 100,000, the sales revenue derived from the sale of goods, labor services, services, and intangible assets shall be exempt from VAT.
II. For small-scale taxpayers eligible for the VAT differential taxation policy, whether they qualify for the VAT exemption stipulated in this announcement shall be determined based on their sales revenue after the deduction.
In the “Value-Added Tax Return (for Small-Scale Taxpayers),” the relevant columns for “Exempt Sales Amount” shall be filled in with the sales amount after applying the applicable tax exemption.
III. Small-scale taxpayers who file taxes on a fixed-period basis may elect either a one-month or a one-quarter tax period; once such an election is made, it cannot be changed within the same accounting year.
IV. With respect to “other individuals” as referred to in Article 9 of the Implementing Rules of the Provisional Regulations of the People’s Republic of China on Value-Added Tax, rental income derived from the leasing of real estate under a one-time rent‑collection arrangement may be allocated evenly over the corresponding lease term. If the monthly rental income after such allocation does not exceed RMB 100,000, it shall be exempt from value-added tax.
V. General taxpayers whose cumulative sales over the 12 consecutive months (with each month constituting a tax period) or over the 4 consecutive quarters (with each quarter constituting a tax period) preceding the date of re-registration do not exceed RMB 5 million may, prior to December 31, 2019, elect to re-register as small-scale taxpayers.
Other matters relating to the re-registration of general taxpayers as small-scale taxpayers shall be governed by the relevant provisions set forth in the “Announcement of the State Taxation Administration on Unifying the Standards for Small-Scale Taxpayers and Several VAT Issues” (State Taxation Administration Announcement No. 18 of 2018) and the “Announcement of the State Taxation Administration on Export Rebate (Exemption) Issues Related to the Unified Standard for Small-Scale Taxpayers” (State Taxation Administration Announcement No. 20 of 2018).
VI. Small-scale taxpayers who, in accordance with current regulations, are required to make advance payments of value-added tax shall be exempt from making such advance payments for the current period if their monthly sales revenue at the place of advance payment does not exceed RMB 100,000. For amounts of tax already paid in advance prior to the issuance of this announcement, taxpayers may apply to the competent tax authority at the place of advance payment for a refund.
VII. For units and individual business households among small-scale taxpayers engaging in the sale of real estate, whether to make advance VAT payments shall be determined in accordance with their tax period, Article 6 of this Announcement, and other applicable current policies; as for other individuals selling real estate, VAT exemption or taxation shall continue to be applied in accordance with the existing provisions.
8. For small-scale taxpayers whose monthly sales do not exceed RMB 100,000, the value-added tax already paid on special VAT invoices issued during the current period may be refunded upon application to the competent tax authority, provided that all copies of the special VAT invoices have been retrieved or red‑letter special VAT invoices have been issued in accordance with the relevant regulations.
9. For small-scale taxpayers, if the sales revenue for January 2019 did not exceed RMB 100,000 (or, for those with a quarterly tax period, if the first-quarter 2019 sales revenue did not exceed RMB 300,000), the tax already paid on the issuance of ordinary invoices during that period may be refunded upon filing the tax return by applying to the competent tax authority.
X. Small-scale taxpayers whose monthly sales exceed RMB 100,000 shall use the VAT invoice management system to issue standard VAT invoices, unified invoices for motor vehicle sales, and electronic standard VAT invoices.
Small-scale taxpayers who are already using the VAT invoice management system and whose monthly sales do not exceed RMB 100,000 may continue to use their existing tax control devices to issue invoices. Those who have already been issuing special VAT invoices on their own may continue to do so and calculate and pay VAT based on the sales revenue from such special VAT invoices.
XI. This Announcement shall take effect as of January 1, 2019. Article 3, paragraph 2, and Article 6, paragraph 4, of the “Announcement of the State Taxation Administration on Matters Concerning the Collection and Administration of Taxes in Connection with the Comprehensive Pilot Program to Replace Business Tax with Value-Added Tax” (State Taxation Administration Announcement No. 23 of 2016), Article 3 of the “Announcement of the State Taxation Administration on Clarifying Certain Collection and Administration Issues Related to the Pilot Program for Replacing Business Tax with Value-Added Tax” (State Taxation Administration Announcement No. 26 of 2016), Article 2 of the “Announcement of the State Taxation Administration on Certain Collection and Administration Issues Related to the Pilot Program for Replacing Business Tax with Value-Added Tax” (State Taxation Administration Announcement No. 53 of 2016), and the “Announcement of the State Taxation Administration on Issues Concerning the Exemption of Value-Added Tax for Small and Micro Enterprises” (State Taxation Administration Announcement No. 52 of 2017) are hereby repealed simultaneously.

Litigation & Arbitration

The World Executive Congress adopted the Shanghai Declaration.

On the afternoon of January 22, all parties attending the World Congress on Enforcement unanimously adopted the Shanghai Declaration of the World Congress on Enforcement (hereinafter referred to as the “Shanghai Declaration”), and the congress concluded after successfully completing its agenda. Chief Justice of the People’s Republic of China and President of the Supreme People’s Court, Zhou Qiang, attended the closing ceremony and delivered a speech.
Following thorough consultations among all parties present, the conference adopted the Shanghai Declaration. The Declaration notes that the reforms and innovations undertaken by Chinese courts in the field of enforcement have given rise to a uniquely Chinese model, enriched international practice, and advanced the rule of law. Effective and efficient enforcement of legally binding documents is of paramount importance for safeguarding the legitimate rights and interests of winning parties, upholding judicial authority, and fostering the development of an honest and trustworthy society. Enforcement agencies should strive to propel compulsory enforcement toward a new stage of transformative progress. Participants also expressed support for establishing, through appropriate mechanisms, a virtual secretariat to broaden and deepen communication and cooperation among countries in this area, and to strengthen the exchange of best practices and the sharing of achievements.
The Shanghai Declaration emphasizes that enforcement agencies should attach great importance to and align with the process of enforcement modernization, continuously pursue reform and innovation, and further elevate the level of enforcement modernization. They should further enhance the openness and transparency of enforcement proceedings, thereby bolstering public trust in the judiciary. Through compulsory enforcement, they should strive to strengthen property rights protection, promote the ongoing improvement of the business environment, and foster economic prosperity. Upholding the principles of impartial, civilized, and good‑faith enforcement, they must effectively prevent the abuse of enforcement powers. They should improve efficiency and substantially reduce the costs associated with debt recovery. Moreover, they should intensify professional training to enhance the ethical standards and competence of enforcement personnel. Finally, they should conduct in-depth research into the underlying patterns and dynamics of enforcement, refine the enforcement system, and ensure the orderly and lawful exercise of enforcement authority.
In his address, Zhou Qiang stated that this conference was both highly productive and conducive to strengthening friendship, marking a new milestone in judicial cooperation among the participating parties in the field of enforcement. During the event, Chinese delegates shared the practices and experiences of courts at all levels in advancing the modernization of enforcement work. Participants engaged in in-depth discussions around the theme of “the modernization of enforcement,” reaching broad consensus and elevating practical cooperation in this area to a new level. The conference adopted the Shanghai Declaration, which is sure to have a far-reaching impact on further promoting the development of judicial relations among countries and on cooperation in the field of enforcement. The Supreme People’s Court of China stands ready to work with all parties to foster more pragmatic and efficient cooperation in the area of enforcement.
Zhou Qiang pointed out that, following in-depth discussions, the participants agreed that compulsory enforcement should play a vital role in advancing the rule of law and building a social integrity system. By carrying out compulsory enforcement, we can ensure that legally effective documents are implemented promptly and accurately, which not only safeguards the legitimate rights and interests of winning parties and upholds judicial authority, but—more importantly—fosters public trust in and respect for the law, as well as reverence for fundamental social norms such as honesty and good faith. This, in turn, contributes positively to improving the business environment, maintaining social order, and promoting the development of a society under the rule of law. To keep pace with economic and social development and align with the modernization process, we must deepen reforms of the compulsory enforcement mechanism, fully leverage information technology, and proactively pursue innovation and reform, so as to better meet the needs of the parties involved and the demands of social development for higher‑quality, more efficient enforcement. As cross‑border trade continues to flourish, civil and commercial disputes are becoming increasingly international in nature. Accordingly, international exchanges and cooperation in the field of compulsory enforcement should be continuously refined and upgraded, with expanded opportunities for collaboration. On the basis of compliance with international rules and established practices, we should explore more appropriate approaches to handling such cases, facilitate the proper resolution of transnational disputes, and advance the establishment of a more open international economic order.
Dmitry Aristov, Head of the Federal Bailiff Service of the Russian Federation and Chief Bailiff, delivered a speech expressing his gratitude to the host of the conference, the Supreme People’s Court of China. He noted that during the event, participants engaged in thorough exchanges of views, thereby enhancing mutual understanding. All parties actively discussed pressing issues in the field of enforcement, advanced the establishment of friendly cooperative relations, and achieved significant results—steps that will undoubtedly contribute to the refinement of national legal systems and help countries more comprehensively and effectively safeguard citizens’ rights and interests.
Chief Justice Muhammad Hatta Ali of the Supreme Court of the Republic of Indonesia, President of the Supreme People’s Court of the Lao People’s Democratic Republic Kanphay Sittidampha, President of the Supreme Court of the Republic of Panama Hernán de León, Chief Justice of the Independent State of Samoa Patu Falefatu Maka Sapolo, Chief Justice of the Democratic Socialist Republic of Sri Lanka Nalin Perera, Minister of Justice of the Kingdom of Cambodia Ang Vong Vathana, and others attended the closing ceremony.
Judge Jiang Wei, a Second‑Class Justice of the People’s Republic of China and Vice President of the Supreme People’s Court, presided over the closing ceremony. Judge Yang Wanming, also a Second‑Class Justice of the People’s Republic of China and Vice President of the Supreme People’s Court, read out the “Shanghai Declaration.” Judge Liu Guixiang, a full‑time member of the Judicial Committee of the Supreme People’s Court and a Second‑Class Justice of the People’s Republic of China, together with Judges Liu Xiaoyun, Xia Daohu, Li Zhenguo, Wu Xielin, Gong Jiali, and several other presidents of higher people’s courts, attended the closing ceremony.

Improving enforcement legislation to address difficulties in enforcement; the Supreme People’s Court is advancing the establishment of a personal bankruptcy system.

On January 22, the World Enforcement Congress was held in Shanghai. At the conference, the Supreme People’s Court stated that it is advancing the enactment of a compulsory enforcement law, promoting the establishment of a personal bankruptcy system, refining the corporate bankruptcy regime, and further improving the joint credit‑based punishment mechanism to ensure smoother access to remedies.

According to statistics, from 2016 to 2018, courts nationwide accepted a total of 20.42 million enforcement cases, concluded 19.39 million, and enforced payments totaling RMB 4.4 trillion. Over the past three years, the rate of voluntary compliance with effective judicial documents has risen steadily: 44.76% in 2015, 50.52% in 2016, and 56.97% in 2017, reflecting the gradual emergence of the effects of strengthened enforcement efforts.

In response to challenges in locating individuals and assets, as well as in converting property into cash, the Supreme People’s Court has promoted the optimization and refinement of methods for identifying and liquidating assets during enforcement proceedings. In 2014, the Supreme People’s Court established a networked enforcement information‑sharing system—the “top‑to‑top” inquiry framework—which leverages information technology, networking, and automation to track judgment debtors and their assets. As a result, enforcement officers can, without leaving their offices, query, freeze, and even seize the bank deposits of defaulters. Today, online judicial auctions have gradually replaced traditional auction methods, becoming the primary means by which people’s courts realize the value of seized assets.

The Supreme People’s Court, together with the National Development and Reform Commission and 59 other agencies, has signed an agreement implementing 150 specific punitive measures across 37 categories in 11 distinct areas. These measures impose restrictions on individuals who have failed to comply with court orders, limiting their ability to hold certain positions, travel, purchase real estate, make investments, and participate in bidding processes, thereby ensuring that such individuals face constraints wherever they go. To date, more than 3.51 million people have voluntarily fulfilled their obligations under pressure. From October 2013 to December 31, 2018, courts nationwide cumulatively restricted 17.46 million individuals from purchasing airline tickets and 5.47 million individuals from buying tickets for bullet trains and high-speed rail services.

“Since 2018, although the number of enforcement cases has continued to rise, the number of individuals placed on the list of discredited persons has been declining, marking a turning point and indicating that comprehensive governance is beginning to yield results,” said Liu Guixiang, a full-time member of the Judicial Committee of the Supreme People’s Court.

It is reported that, while intensifying penalties for those who lose trust, the people’s courts are also placing great emphasis on incentivizing and commending law-abiding individuals, and will explore measures such as lowering the threshold for trustworthy parties to qualify for property preservation.

A lawyer in Guangdong had his license revoked for submitting an unlawful defense statement.

On the grounds that Attorney Liu Zhengqing made “statements endangering national security and maliciously defaming others” in his defense brief, the Guangdong Provincial Department of Justice imposed an administrative penalty of revoking his lawyer’s practice certificate. Recently, the department published the administrative penalty decision.

According to the decision, the party concerned, Liu Zhengqing, served in November 2016 and June 2017, respectively, as the defense counsel for appellant Zhang in case No. (2016) Xin Xing Zhong 73 heard by the Xinjiang Higher People’s Court, and as the defense attorney for appellant Li in case No. (2017) Yue 06 Xing Zhong 557 heard by the Foshan Intermediate People’s Court. The content of the defense opinions he submitted falls within the circumstances stipulated in the Lawyers Law that warrant legal accountability, and the nature and severity of his unlawful conduct are particularly egregious, seriously undermining the image of the legal profession and giving rise to adverse social repercussions. Accordingly, a penalty of revoking his lawyer’s practice certificate has been imposed.

Other

Ministry of Civil Affairs: National-level industry associations and chambers of commerce are required to proactively reduce excessively high fees.

On January 23, the Ministry of Civil Affairs convened a symposium on implementing the central government’s spirit of tax and fee reductions among national industry associations and chambers of commerce. The meeting stipulated that, in 2019, these organizations should adhere to a bottom line of refraining from unauthorized or compulsory fees, while striving to set high standards and impose stringent requirements to reduce both fee levels and the overall scale of charges, thereby making more effective and robust contributions to alleviating the burden on enterprises and fostering a favorable business environment.

Industry associations and chambers of commerce must streamline and standardize their fee‑charging practices. The immediate priority is to implement the following measures:

First, membership fee practices must be standardized. If industry associations and chambers of commerce charge duplicate membership fees at both their headquarters and branch (representative) offices, they must immediately and unconditionally abolish the fee schedules for those branches or representative offices and cease collecting such fees. Where fee schedules exceed four tiers, they must be revised to four tiers or fewer, and no further sub‑tiering within a given tier is permitted. For industry associations and chambers of commerce that base membership fees on output, sales volume, enterprise size, or similar criteria, reasonable caps on membership fees must be established; fee structures must be streamlined to four tiers or fewer, with specific, clearly defined fee amounts set for each tier based on sound cost‑estimation methodologies, and fees within each tier must be collected at these fixed amounts.

Second, it is necessary to standardize fee‑charging practices for business and service activities. Industry associations and chambers of commerce shall, in accordance with the relevant provisions of laws and regulations on operators’ obligations and the principle of voluntary, paid services, conduct business and service activities within the scope of their purposes and areas of operation, and regulate related fee‑charging practices. For fees subject to government price regulation, they must strictly adhere to the fee standards set by the competent pricing authorities; for those subject to market‑determined pricing, they shall, in line with the principles of fairness, legality, and good faith, reasonably determine and publicly disclose fee schedules, and provide services that are commensurate with their value. Industry associations and chambers of commerce may not compel the provision of services or impose charges thereon.

Third, it is imperative to resolutely put an end to the practice of conducting unauthorized evaluations, standard‑setting, and award‑granting activities that involve charging fees. When industry associations and chambers of commerce organize such activities, they must strictly comply with the relevant provisions of the Interim Regulations on the Administration of Evaluation, Standard‑Setting, and Award‑Granting Activities by Social Organizations (Guo Ping Zu Fa [2012] No. 2) and complete the required application and approval procedures. For evaluation, standard‑setting, and award‑granting activities that have been approved, no fees may be levied on participants, nor may any related fees—whether direct or disguised—be collected before, during, or after the selection process.

Fourth, proactively reduce excessively high fees. Appropriately lower membership dues and other fee standards to alleviate the burden on enterprises. For services included in the basic membership fee package, no additional charges may be imposed on members. Eliminate unreasonable fee items, reduce rates for services with substantial surpluses, and refrain from imposing disguised charges through compulsory donations or mandatory sponsorships. For any fee items that are retained, ensure a tangible improvement in service quality.

Fifth, membership practices must be standardized. Adhering to the principles of voluntary membership and free withdrawal, organizations shall not rely on government departments or exploit monopolistic advantages and industry influence to impose or indirectly compel membership, nor may they obstruct members’ right to withdraw. National-level industry associations and chambers of commerce generally admit enterprise members that are representative at the national level, while provincial-level industry associations and chambers of commerce typically admit enterprise members that are representative within their respective provinces.

At the symposium, participating delegates pledged to carefully study and formulate implementation measures, standardize fee‑charging practices, proactively reduce fees, and strictly adhere to red lines—refraining from arbitrary charges, unauthorized evaluations and awards, or compulsory fee collection—in order to effectively alleviate the burden on enterprises and foster a favorable business environment.

Heads of 11 national industry associations and chambers of commerce, including the China National Textile and Apparel Council, the China Iron and Steel Association, the China National Light Industry Council, the China Machinery Industry Federation, the China Building Materials Federation, the China National Coal Industry Association, the All-China Federation of Industry and Commerce, the China Association for the Development and Service of High-Quality Agricultural Products, the China Road Transport Association, the China Chamber of Commerce for Import & Export of Medicines & Health Products, and the China Internet Finance Association, attended the meeting.

Guangdong has preliminarily clarified the “gene-edited baby incident.”

On January 21, the investigation team into the “gene-edited baby incident” in Guangdong Province stated that preliminary findings indicate the case was orchestrated by He Jiankui, an associate professor at the Southern University of Science and Technology, who, in pursuit of personal fame and profit, raised funds on his own, deliberately evaded regulatory oversight, and unilaterally organized relevant personnel to carry out human embryo gene-editing activities for reproductive purposes—actions expressly prohibited by national law.

According to the investigation team, starting in June 2016, He Jiankui secretly organized a project team that included participants from overseas, deliberately evading regulatory oversight and employing technologies whose safety and efficacy remained uncertain to carry out human embryo gene‑editing activities for reproductive purposes—activities expressly prohibited by national law. From March 2017 to November 2018, He Jiankui enlisted others to forge ethics review documents and recruited eight pairs of volunteer couples—where the male partner was HIV‑positive and the female partner was HIV‑negative—to participate in the experiment. To circumvent regulations barring the use of assisted reproductive technologies in individuals carrying HIV, he orchestrated for others to substitute for volunteers during blood tests and instructed certain practitioners to illegally perform gene editing on human embryos and implant them into surrogate mothers. As a result, two volunteers became pregnant; one has already given birth to twin girls, “Lulu” and “Nana,” while the other remains pregnant. Of the remaining six volunteer pairs, one withdrew from the study midway, and the other five did not achieve pregnancy. This conduct gravely violates ethical standards and scientific integrity, flagrantly breaches relevant national regulations, and has caused severe adverse repercussions both domestically and internationally.

An official from the investigation team stated that He Jiankui, along with all individuals and institutions implicated, will be held strictly accountable in accordance with laws and regulations; those suspected of criminal offenses will be referred to the public security authorities for prosecution. With regard to the newborn infants and pregnant volunteers, Guangdong Province, under the guidance of the relevant national authorities, will work jointly with the concerned parties to carry out medical monitoring and follow-up measures.

On November 26, 2018, He Jiankui’s team publicly announced the birth of a pair of gene-edited infants. Immediately thereafter, Guangdong Province launched an investigation into the “gene-edited baby incident.”

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