As highlighted in KPMG China Tax Weekly Update (Issue 2, January 2017), the State Council’s executive meeting on 28 December 2016 chaired by Premier Li Keqiang approved new guidelines to further attract foreign investment. To complement this, on January 2017, the State Council published the new policy on foreign investment (Guo FaAs highlighted in KPMG China Tax Weekly Update (Issue 2, January 2017), the State Council’s executive meeting on 28 December 2016 chaired by Premier Li Keqiang approved new guidelines to further attract foreign investment. To complement this, on January 2017, the State Council published the new policy on foreign investment (Guo Fa  No. 5) setting out 20 measures including, inter alia:  No. 5) setting out 20 measures including, inter alia:
|Further opening up of Chinese market||
|Creation of level playing field||
|Increase efforts to attract foreign investment||
On 13 October 2016 the State Council issued several measures to better regulate internet finance, with Guo Ban Fa  No. 21 (“Circular 21”). According to Circular 21, third-party payment businesses, and non-bank payment institutions are not allowed to seize customer prepayments*, and the prepayment accounts should be opened at the People’s Bank of China (PBOC) or qualified commercial banks with no interest. To implement this, on 13 January 2017, the PBOC issued Yin Ban Fa  No. 10. This requires that the deposit management of customer prepayments shall be carried out in a centralized way, and highlights the following:
* Customers’ prepayments refer to money balances temporarily held by the payment institutions, which do not constitute proprietary assets of the payment institutions. For example, Wechat balances and Ali pay balances are both customers’ prepayments.
Based on news published on the website of the Cyberspace Administration of China (CAC), the CAC recently issued a notice, applicable from 16 January 2017, under which app stores in China are required to register with the country's top cyberspace regulator. This is on the asserted basis that some apps that have been found to spread illegal information, violate user rights and/or constitute security risks, and the move is intended to curb the spread of malware and illegal information on mobile phones. The news highlights:
* The full content of the notice has yet to be published. We will continue to follow this.
On 18 January 2017, the State Council issued Guo Fa  No. 81, setting out measures to facilitate the sound development of private education, including a series of preferential tax policies:
To complement this, authorities, such as Ministry of Education, Ministry of Human Resources and Social Security, State Administration for Industry & Commerce etc. jointly issued Implementation Rules for Classified Registration of Private Schools and Implementation Rules for Overseeing Profit-making Private Schools. These clarify the specific issues for classified registration of private schools and set-up of profit-making private schools.
On 16 January 2017, China’s Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly publicized a draft Arable Land Occupation Tax (ALOT) Law (“the Draft”) to solicit the public comments, which are welcomed before 14 February 2017.
Compared with the existing State Council-issued rules for ALOT, the rules will be set out in statutory law issued by the National People’s Congress (NPC), with the framework of the existing tax system and tax burden remaining basically unchanged. However, in the Draft, there are still some adjustments made, relative to the existing provisions. The proposed changes are driven by economic and social developments in China, advances in tax collection, and build upon the basis of the current implementation rules for ALOT.
|Taxpayers and taxable items
* ALOT law will become the 6th tax law in China, alongside Tax Collection and Administration Law, Corporate Income Tax Law, Individual Income Tax Law, Vehicle and Vessel Tax Law and Environmental Protection Tax Law. According to the legislation plan issued by the China’s National People’s Congress (NPC) in 2015, more existing State Council regulations such as on real estate tax, VAT, resource tax, custom duty and vessel tonnage dues, will be put on a statutory basis in the near future (i.e., to turn them into laws passed by NPC).