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bdp: One-stop service for more than 25 years

Every company needs supports of experienced consultants on site, to conduct effective evaluation and analysis for production and operation process, to help to establish a modern management system, to recommend for actions, and to assist in the implementation of these recommendations in order to raise business economic benefits. When a company running business abroad, far away from the parent company, this process will certainly face many difficulties. Especially for small and medium sized enterprises, they must keep monitoring the relevant laws and regulations on tax, legal, foreign exchange and customs domestic and abroad.

For more than 25 years bdp has helped several hundred clients in the fields of auditing, tax, legal, financing, process optimization, internal control, restructuring and M&A. We are always there to help all SMEs and their subsidiaries abroad and maintain on their behalf an overview of the constantly changing requirements made by taxation, company, labour and accounting laws.

As one of Germany’s leading consulting firms, bdp provide German companies „One-stop service, a whole package solution” to the companies that they may encounter the challenges in different stages of China´s investments. Please do not hesitate to contact our experts to discuss your China´s investment from the tax & accounting and legal perspectives.

Dr. Michael Bormann
Founding Partner of bdp

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News

State Administration of Taxation Announcement No. 49

On 27 August 2014 China’s State Administration of Taxation issued Announcement No.49 of 2014 (“SAT Announcement 49”) which is a comprehensive statement of the policies for claiming exemption from Value-Added Tax (“VAT”) under the VAT pilot program in China for exported services. SAT Announcement 49 will become effective from 1 October 2014.

Decree No. 76 of China Ministry of Finance People's Republic of China - Decision of Changes on "Basic Standards for Business Enterprises Accounting Standards"

The decision made by Ministry of Finance to amend the Basic Standards of Accounting Standards for Business Enterprises has been considered and approved by the meeting of the Ministry of Finance, is hereby announced and starts to be implemented from the date of announcement -23 July 2014.

Tax Treatment for the Entertainment and Advertising Expenses in the Set- up Period

Announcement of SAT 2012 No. 15 stipulates that during the enterprise set up period, entertainment expenses incurred are tax deductible to the extent of 60% of the expenses incurred, advertising and promotional expenses are tax deductible for the actual expenses incurred.

New Tax Treaty between Netherlands and China

On 31 May 2014, a new agreement between the Kingdom of the Netherlands (hereinafter referred to as “Netherlands”) and the People’s Republic of China (hereinafter referred to as the “PRC”) for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (hereinafter referred to as the “new DTA”) its protocol were signed in Beijing.

New Tax Treaty between Germany and China

On 28 March 2014, a new agreement between Germany and the People’s Republic of China (hereinafter referred to as the “PRC”) for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (hereinafter referred to as the “new DTA”) and its protocol were signed. The New DTA and its protocol will enter into force on the 30th day following the day on which both countries notify each other of completion of their respective ratification procedures.

Unification of VAT Levy Rate

Recently the Ministry of Finance, State Administration of Taxation issued a notice: unification of VAT rates. Except for a 5% levy rate applicable to the exploitation of crude oil and gas by Sino-foreign cooperative oil and gas fields, other applicable VAT levy rates of 6% and 4% are unified to 3%, effective from 1st July 2014.

VAT reform exemption exceeds RMB 220 billion, expand to telecommunications

Chinese businesses saved RMB 220.3 billion ($35.5 billion) as of the end of March, due to a pilot scheme to replace turnover tax with value-added tax (VAT).

Company Law of People’s Republic of China (2013 Amendment)

The new amendment to the Company Law comes into force on 1 March 2014. The amendment has lowered the company establishment requirements and reformed the company capital registration regime. We list the major changes from the previous 2005 version.

SAT Delegates Power of Recognizing and Verifying Tax-Resident

The State Administration of Taxation (SAT) recently issued the Circular on Recognizing Tax-Resident Enterprises by Standards of De Facto Management Bodies, clarifying relevant management measures following the delegation of the power of recognizing and verifying tax-resident enterprises to tax authorities at the provincial level and below.

Preferential income tax policy for small and low-profit enterprises

On 8 April 2014, the Ministry of Finance (“MOF”) and the State Administration of Taxation (“SAT”) issued “Announcement on Preferential Income Tax Policies for Small and Low-Profit Enterprises” ( Caishui 2014 No. 34), which is in effective from 1 January 2014 to 31 December 2016. Based on the announcement, small and low-profit enterprises whose annual taxable income not exceeding RMB 100,000, shall be subject to income tax at the rate of 20% on only 50% of the taxable income.

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