Legal & Taxation Working Group meeting in Shenzhen - 28th August meeting on the Corporate Income Tax Law and its implementation

We are pleased to invite you to the next Legal & Taxation Working Group meeting. In this meeting the group will discuss the Corporate Income Tax Law and its implementation. The meeting will be held on Tuesday, the 28th of August at 4:00pm at the Shangri-La Hotel in Shenzhen.

In the Legal & Taxation WG the participants are experts on the field of laws and regulations. The working group will meet regularly and discuss new laws and issues the European Companies face in China.

Agenda:
3:30 - 4:00pm: Registration
4:00 - 5:30pm: discuss the Corporate Income Tax law and its implementation
Venue:
Shangri-La Hotel Shenzhen, East Side, Railway Station, 1002 Jianshe Road
For directions, please feel free to call the Hotel (0755 8233 0888) or check the map. Click Here

This WG focuses exclusively on experts on this field. We want to provide you a platform, where you can exchange your experience and talk about your concerns.

In order to clarify, please confirm your availability with an email to tmolz@euccc.com.cn.

Best regards,

Tina Molz
Business Manager
tmolz@euccc.com.cn
020 8758 0479

Event review

Legal & Taxation Working Group Minutes

Date: 28th August, 2007
Venue: Shangri-La Hotel Shenzhen
Author: Tina Molz

Agenda
1. Welcome
2. Roundtable discussion about the new Corporate Income Tax law and its implementation

Discussion Points

1. Welcome

Tina Molz welcomed all participants and informed the group about the possibility to run for chairperson of the Working Group.

2. Roundtable discussion about the new Corporate Income Tax law and its implementation

In the beginning of the roundtable discussion, the participants stressed out that there will be more details of the implementation of the law coming out in September.

The group reminded that the new law’s objective is to apply a uniform rate (25%) replacing the different rates currently applied to foreign companies and local companies in China.

It was said that the inconsistency of the implementation in the cities like Guangzhou, Dongguan, Foshan, and Shenzhen causes many problems for foreign companies. In Foshan and Dongguan it seems, based on participants’ experience, that the law will be applied in a stricter manner than in Guangzhou or Shenzhen. One important issue is whether a withholding tax will be eventually applied to the payment of dividends overseas. Its application would have a negative impact for the foreign companies succeeding in China.

It is also important to clarify the definition of high-tech enterprises as these companies are applied a 15% rate. All companies have to expect renegotiations of the law for different points and its implementation.

It was said that the new Corporate Income Tax law shows the changed focus China has. China does not concentrate that much on attracting foreign investment anymore. This law aims more to support Chinese companies to go abroad and to grow in China. The foreign and Chinese companies will be treated the same way.

The group considers that the impact on the foreign companies may not be significant enough to lead companies to move their branches out of the country, as the business environment and the law and regulation as a whole are still the main criteria for a company to enter the Chinese market. For companies that are applied the normal rate, mainly services companies, this change in Corporate Income Tax rate will lead to a reduction of their tax burden. The new law will also encourage R&D centre to set up in China.

The group came to the conclusion that the impact of the new Corporate Income Tax law has to be analyzed for each type of company, and that even more important than the Corporate Income Tax rate is the application of this new law itself (will the change be effectively applied in each city in the same way, will the limit of expenses’ deductibility be applied in the same way everywhere in China?...).
Furthermore, it was said that the new VAT regulation regarding the VAT export refund is a more significant issue for the companies exporting their goods, notably SMEs. That is why the group will discuss the new VAT regulation on the next meeting in the middle of October. The exact date and venue will be announced soon.

It was also said that the meeting in the beginning of December should be a joint session with the Human Resources Working Group about the new Employment Contract law, since there should be some new regulations about the implementation

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