European Chamber seminar in the Wai Gao Qiao Free Trade Zone Go back »

2006-08-26 | Shanghai

European Chamber seminar in the Wai Gao Qiao Free Trade Zone

On October 18th, the European Chamber held a seminar in Waigaoqiao FTZ on the outskirts of Shanghai. The topics were the latest tax and customs regulations in China. The seminar was held with the support of the Shanghai Waigaoqiao Free Trade Development Co., Ltd. Marketing & Service Centre and the Bonded Exhibition & Trade Centre.

Speaking at the seminar were Ralph Dreher, Manager, Tax - Structure and Trade, Price Waterhouse Coopers and William Chea, Senior Manager, Customs and International Trade Practice, Ernst & Young.

Mr. Dreher began by introducing issues on the new requirements for Transfer Pricing. New regulations should be released at the end of this year and are expected to be retroactive for 2006. He continued by explaining the experimental VAT system currently in operation for 8 industry sectors in three northern provinces. It is yet to be announced whether the system will be expanded for these eighth industries nationwide or if the scope of the industries will be widened in the three provinces. He next discussed the proposed abolition of Circular 35 which will affect how interest and rental income are taxed in China. Mr. Dreher concluded with an overview of the proposed tax reforms that will affect European companies doing business in China. With proper legal structures, however, there are still plenty of ways to efficiently streamline a company to deal with the proposed changes.

The seminar continued with Mr. Chea giving a thorough account of how recent changes in the customs regulations are being implemented. He began by citing the GAC Decree 148 which was adopted on May 1st this year. There are still "interpretation gaps" in the areas of warranty costs, FTZ evaluation and royalties. He also touched on an obvious move by officials towards more scrutiny in the area of Transfer Pricing. Rules are more or less aligned with WTO regulations, Mr. Chea said, but the key challenge is now with the interpretation. Next he raised the point that the change in the export VAT refund from September is really asking the question of whether China can still be considered a competitive place for an export manufacturing base. The presentation concluded with a brief look at the Asia Pacific Trade Agreement (APTA). Mr. Chea told attendees that while the product coverage is somewhat limited, it is the only trade pact that links the three Asian giants of China, Korea and India.

The European Chamber will continue to keep abreast of the issues that were raised in this seminar and will continue to keep members updated on any changes in the legislative environment. It was the first time that the European Chamber had held a seminar in the Waigaoqiao Free Trade Zone and with the success of the event other events will be planned that bring the hottest issues directly to those based in the zones dotted around Shanghai.