On 18 July 2017, the State Council issued Guo Ban Fa  No. 69. This set out the Implementation Plan (“the Plan”) on Corporate Governance Reform for Central State-Owned Enterprises (SOEs), many of which are specially registered under the ‘Laws on Industrial Enterprises Owned by the Whole People’. The Plan aimed to more clearly separate the operational management of the targeted SOEs from government administration. This is to be achieved by restructuring them into limited liability companies (still under state ownership) to increase business efficiency. The change also facilitates the later involvement of private investment in the enterprises, as part of the government’s broader scheme of moving SOEs to a mixed-ownership model. According to the Plan, the reform is to be completed before the end of 2017, and all the central SOEs (excluding financial and cultural sector (e.g. state media) enterprises) are required to be restructured into limited companies or corporations (See KPMG China Tax Weekly Update (Issue 30, August 2017)).
To support this reform from the tax side, the State Administration of Taxation (SAT) on 22 September 2017 issued the Notice on Corporate Income Tax (CIT) Treatment Concerning Enterprises Owned by the Whole People Restructured into Limited Companies (SAT Announcement  No. 34, “Announcement 34”). This clarifies the CIT deferral treatment for restructured SOEs. Announcement 34 applies to the 2017 annual CIT filing and subsequent years.
Announcement 34 clarifies the following CIT treatment:
On 18 September 2017, the State Administration of Taxation (SAT) and the Ministry of Science and Technology (MOST) jointly issued the Notice on Enhancing the Implementation of the R&D Bonus Deduction Policy (Shui Zong Fa  No. 106, “Circular 106”). This aims to strengthen the implementation of the research and development (R&D) expense bonus deduction policy.
Prior to this, the Ministry of Finance (MOF), SAT and MOST issued Guo Ke Fa Zheng  No. 211 (Circular 211) in July 2017, clarifying how to deal with tax authority objections to R&D bonus deduction claims (See KPMG China Tax Weekly Update (Issue 33, August 2017) for more details). Circular 106 is built upon Circular 211, setting out the following requirements for tax authorities and MOST at all levels:
* For more information about the R&D “bonus deduction” policy, you may access the following KPMG publications:
An executive meeting of the State Council on 27 September 2017 set out several measures to further boost development of small and micro enterprises (SMEs). These measures include:
As highlighted in KPMG China Tax Weekly Update (Issue 38, September 2017), the SAT on 14 September 2017 issued Shui Zong Fa  No.101 (“Circular 101”), setting out 30 measures to further simplify tax administration.
Building on this, the SAT recently issued Shui Zong Fa  No.102 (“Circular 102”). This facilitates cross-province taxpayer operations by allowing certain tax matters to be handled with tax authorities, other than the taxpayer’s in-charge tax authority, in other provinces. This does not, however, affect tax revenue attribution, and the taxpayer’s in-charge tax authority remains unchanged. An application must be made for this treatment, and matters covered include: