On 3 November 2017, the National Development and Reform Commission (NDRC) issued Administrative Measures for Outbound Investment by Enterprises (Exposure Draft) (the “2017 Draft OI Measures”) for public comment. The 2017 Draft OI Measures builds on the 2014-issued Administrative Measures on Approval and Filing for Outbound Investment Projects (NDRC order No. 9), aiming to overhaul China’s management system for outbound investments. Specifically, the 2017 Draft OI Measures:
The 2017 Draft OI Measures set out more specific rules for approval and filing procedures, and on the timing and extension of validity periods for approved and filed documents. It also introduces new reporting mechanisms for outbound investments such as reporting on project completion status, and reporting on materially adverse situations encountered with investments.
On 30 October 2017, the State Administration of Taxation (SAT) released Tax Guidance for Outbound Investment (“the OI Guidance”). This aims to better serve the national external economic strategy, and lower “going out” taxpayers’ tax risks.
The OI Guidance summarizes 83 items for “going out” enterprises in four categories: tax policies, tax treaties, administrative rules and tax service measures. Each item consists of four sections, specifying applicable taxpayers, applied tax policies/treaties, application condition and legal basis. The 83 items include:
This is just a summary of existing policies and does not involve introducing any new policies.
The Standing Committee of the National People’s Congress (NPC) on 31 October 2017 reviewed the Draft Vessel Tonnage Tax Law (the “Draft Tonnage Bill”) and released the Draft Tonnage Bill to solicit public comments by 6 December 2017. Placing existing Chinese taxes on a statutory basis is part of the Chinese government’s effort to reinforce the ‘rule of law’. Taxes such as tobacco tax and VAT are also undergoing a similar transition (see KPMG China Tax Weekly Update (Issue 35, September 2017) for the latest development of tobacco tax).
Vessel tonnage tax (VTT) is currently based on 2011 State Council-issued rules and these will be replaced by statutory law issued by the NPC. Under the current rules, where vessels enter into a port within the territory of China from a port outside China, VTT shall be levied based on net tonnage and term of tonnage tax licenses issued by Chinese Customs. According to Mr. Xiao Jie, Minister of Finance, the framework of the existing VTT, and its tax burden, will remain unchanged.