On 20 March 2018, the State Council issued Guo Ban Fa  No. 14, announcing their 2018 legislation work plan. The plan sets out the following tax law legislation items to be approved by the Standing Committee of the National People’s Congress (NPC):
All of these will be drawn up by the State Administration of Taxation (SAT) and Ministry of Finance (MOF).
The plan also sets out legislation items relevant for investment and business operations of foreign enterprises in China, including:
China’s 13th National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) held meetings in the period March 3-20 2018. Premier Li Keqiang, in the course of his government work report address to the NPC, highlighted that China will further reduce enterprise tax burdens and local fees and fund contributions, through:
At the 10 November 2017 China-US economic cooperation meeting, China committed that it will lift the ceiling on foreign equity ownership in securities, fund management and futures companies from 49% to 51%. China will eliminate all equity ownership limits once this initial relaxation to 51% has been in place for three years (i.e., where the relaxation to 51% is in place from 2018 to 2020, the full relaxation will take effect from 2021).
To fulfill the commitment, China Securities Regulatory Commission (CSRC) on 9 March 2018 issued the draft Administrative Measures on Foreign-invested Securities Companies (the “2018 draft measures”) to solicit public comments.
The draft measures make revisions to the existing Rules on Establishment of Foreign-invested Securities Companies (issued under CRSC Order No. 86, referred to as the “2012 measures”), including:
On 16 March 2018, the Interim Report on the Tax Challenges Arising from Digitalisation (Interim Report), prepared by the Task Force on the Digital Economy (TFDE), was released on to the OECD website.
The Interim Report reviews the progress made in tackling the issues of double non-taxation and aggressive tax planning which motivated the 2013-2015 Base Erosion and Profit Shifting (BEPS) project to reform global tax rules. It surveys the increasing adoption, across countries, of unilateral measures to tax digitalised businesses. It sets out a new theoretical framework for analysing the value creation processes in digitalised business models to underpin the revision of international tax rules. Most importantly, the report makes clear that while there is no current consensus among countries on how to revamp the international tax framework for the digital era, and no consensus on the use of interim measure turnover taxes, the Inclusive Framework on BEPS will seek to arrive at a new global consensus by 2020.
The 218 pages of the Interim Report are divided into eight chapters, the most important of which are: (i) Chapter 5, ‘Adapting the International Tax System to the Digitalisation of the Economy’, which sets out the alternative views of countries on the need for long-term restructuring of international tax rules; and (ii) Chapter 6, ‘Interim Measures to address the tax challenges arising from Digitalisation’, which sets out the conflicting positions of countries on the need for interim measure turnover taxes.
With regard to the detailed analysis of the Interim Report, please read the following KPMG publication:
On 9 March 2018, the OECD has issued new model disclosure rules that require lawyers, accountants, financial advisors, banks and other service providers to inform tax authorities of any schemes they put in place for their clients to avoid reporting under the OECD/G20 Common Reporting Standard (CRS) or prevent the identification of the beneficial owners of entities or trusts.
According to the CRS requirements, over 100 jurisdictions have commenced the reporting and automatic exchange on offshore financial accounts this year. Many taxpayers having disclosed offshore assets, and around EUR 85 billion in additional tax revenue identified as a result of voluntary compliance mechanisms and offshore investigations.
At the same time, per the OECD, there are still persons that, often with the help of advisors and financial intermediaries, continue to try hiding their offshore assets and fly under the radar of CRS reporting. The new rules target these persons and their advisers, by introducing an obligation on a wide range of intermediaries to disclose the schemes to circumvent CRS reporting to the tax authorities. The new rules also require the reporting of structures that hide beneficial owners of offshore assets, companies and trusts.
These model disclosure rules will be submitted to the G7 presidency and are part of a wider strategy of the OECD to monitor and act upon tendencies in the market that try to avoid CRS reporting and hide assets offshore. As part of this work, the OECD is also addressing cases of abuse of golden visas and similar schemes to circumvent CRS reporting.
China is set to commence CRS exchanges in the ‘second wave’ in September 2018. To facilitate this, in May 2017, six government authorities, including SAT, MOF and People’s Bank of China (PBOC) issued the “Measures on the Due Diligence of Non-resident Financial Account Information in Tax Matters” (the “Measures”), and financial institutions in China are currently putting the systems and protocols in place to enable collection and reporting of the requisite non-resident account holder information (see KPMG China Tax Weekly Update (Issue 21, May 2017) for details).
Subsequently, on 18 December 2017, the PBOC, SAT and State Administration of Foreign Exchange (SAFE) jointly issued Yin Fa  No. 278. This set out further guidance to facilitate the implementation of the Measures (see KPMG China Tax Weekly Update (Issue 2, January 2018) for details).
With regard to the detailed content and impact of the Measures, you can read the following publications: