After years of deliberation the new PRC Corporate Income Tax Law was approved during the 5th Session of the 10th National Peoples Congress (NPC) in March this year. The new Law includes but is not limited to the much debated unified tax rate for both domestic enterprises and FIEs, changes to the current tax holiday and preferential tax treatments, and grandfather provisions. The law will become effective as soon as January 1, 2008 and relevant authorities have been working on the implementation rules that are expected to be passed within the next days.

The European Chamber is delighted to welcome Ms. Amy Cai and Mr. Ralph Dreher from Pricewaterhouse Coopers to share with us insights in the new implementation rules and give practical advice."

Agenda
8.00  8.30   Registration
8.30  9.00   Presentation by Ms. Amy Cai
9.00  9.30   Presentation by Mr. Ralph Dreher
9.30 10.00  Q&A

Registration
To register for this event, please email the below given form to Ms. Wang Xiaomei at mbouromand@euccc.com.cn by Monday, November 19th, noontime. Confirmations and cancellations by phone are not accepted. Please note that cancellations should be done before November 19th, noontime. No-shows who fail to cancel before this time will be invoiced for the event. Registrations done after the deadline will be accepted only if space permits and are charged an additional 50 RMB walk in fee.

Company:
Member of the European Chamber Y ( )           N ( )
Name of Attendee(s) 1)                                   2)
Phone:
Fax:

Event review

Navigating New Legislation – Corporate Income Tax Law

Anticipating the impact of January 1, 2008

On the 20th of November the European Chamber in Shanghai organised a highly successful event on the subject of the implementation rules of the corporate income tax law.

2007 has seen a number of wide-reaching laws make their way into the public either with the issuing of drafts for comment, being promulgated or reaching the final stop on the road to implementation. The Property Law, Labour Contract Law, Anti-Monopoly Law amongst others will all influence how business is done in China over the coming years.

On of the most significant of these has been the Corporate Income Tax (CIT), released on the 16th of March, to be implemented from January 1st 2008, this law simply stated affects all companies in China, be they local or foreign, irrespective of industry. For many they see an end to China as a place for low tax. China still has many advantages for exporting manufacturers and now has flourishing new domestic markets and a burgeoning service industry. Labour costs remain relatively low and the slow emergence of a pool of talented and creative workers in R&D plus incentives in this area is encouraging a whole new kind of business here.

With the implementation rules of the CIT expected any day, the Finance & Taxation Working Group of the European Chamber in Shanghai organized a seminar on November 20th to address the needs and interests of members. It is believed that the implementation rules will be less specific than previously anticipated allowing wide room for interpretation. Therefore companies need to have a thorough understanding of how this new tax system will affect their business in China.

Moderated by Jeff Kadet, Deloitte, with a presentation from Ralph Dreher, PricewaterHouse Coopers and his colleague Amy Cai joining for the discussion, all three presenters threatened to talk at length and in depth about the law and indeed were true to their word. What ensued was a clear analysis of the overall law and frank assessment of the areas lacking clarity and needing particular attention.

Mr. Dreher’s presentation looked at four issues: where we are now, latest insights into the draft detailed implementation regulations, new challenges & opportunities and preparing for the future.

Topics covered included determining the ‘place of effective management’ which may see ‘foreign companies’ classed as a ‘tax resident enterprise’ (TRE) and therefore liable to being taxed on their worldwide profits in China. Discussion continued with a crucial issue of the withholding tax on dividend distribution to foreign shareholders. It is widely believed that this will be 10% with some exemptions for high and new technology companies. It is worth looking around for jurisdictions that have treaties with the PRC when considering a restructuring.

Mr. Dreher continued with the status of ‘high and new tech’ companies, what criteria need to be met as well as what benefits can be had by falling into this category.

The presentation concluded with a summary of Chapter 6, Special Tax Adjustments, which includes the guidelines for general anti-avoidance rules, controlled foreign corporation, cost sharing arrangements, thin-cap rules and transfer pricing. All of which are worthy of a seminar in their own right.

A long and lively question and answers session ensued with Amy Cai and Jeff Kadet fielding a wide of questions on many of the issues that came up throughout the presentation. Amongst other issues, both speakers offered some concrete suggestions for how to go about anticipating issues for repatriating dividends abroad and for approaching the subject of being considered a tax resident enterprise.

Regardless of that fact that there may still be uncertainty in the implementation rules, whether structuring is possible immediately or not, every company must be closely examining their own structure in advance of January 1st. The European Chamber will monitor this topic closely and the Finance & Taxation Working Group will undoubtedly hold meetings on this red hot topic over the coming weeks.

To view the presentation please  click here.

To contact Mr. Reggie Lai (rlai@apcoworldwide.com) or his colleague Ms. Berenice Voets (bvoets@apcoworldwide.com) please call (21) 5298 4668

Related

Contact