China - New Measures to Boost Foreign Investment

On August 16, 2017, China’s State Council issued a notice (Guo Fa [2017] No.39) on measures to boost foreign investments. Foreign investment plays a crucial role in China’s Reform and Open-up Policy, and the notice intends to optimize the structure and improve the efficiency of using foreign investments.

Loosen the threshold for Market Access

As regards the market access, the Post-Establishment National Treatment policy will be fully implemented to attract investment from abroad. This is going to be supplemented with a Negative List, eliminating business volatility. Several industries are boosted as well, including the energy production for new energy vehicles, and industries such as banking, financing, insurance, are open to foreign capital.

Tax Incentive Policy

The notice comes up with several incentive measures, amongst which measures including:

  • If non-resident enterprises reinvest in encouraged industries in china with dividends received from resident enterprises, they may conditionally defer their corporate tax on the reinvestment income;
  • The preferential treatment on advanced technology service enterprises in pilot cities is to be carried nationally;
  • Encourage multinationals to set up their head office in China;
  • Corresponding favourable tax policy on remitting foreign income of resident enterprises back to China.

Optimize Invest and Business Environment, Easier Talent Flow

As regards operating environment, the notice stressed that non-resident enterprises should be able to remit their both positive and passive income sourced in China, and the investor are free to choose currency used. In addition, foreign investments are allowed to join the mixed ownership reform of state-owned enterprises. Visa policy for knowledged labour becomes more tolerant as well to facilitate talent flow.

Sources:  Gov.cn, CTAX, Wallstreetcn

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