OUR INSIGHTS

• State Administration of Taxation clarifies VAT invoice regulations

TAX

• Increase in export value added tax refund rates for certain products

CORPORATE ADVISORY

• China retrospectively expands scope of withholding tax policy for foreign investment

HUMAN RESOURCES

• Beijing recommends 8.5% increase in wage for local employees

• Minimum monthly wages exceed RMB2,000 in seven locations

State Administration of Taxation clarifies VAT invoice regulations

China’s State Administration of Taxation (SAT) issued notices to clarify the following value added tax (VAT) invoice regulations:

Taxpayer’s identification number on regular VAT invoices
Since 1 July 2017, corporate buyers have been required to provide their taxpayer’s identification number or unified social credit code when requesting a regular value added tax invoice from their vendors, who will indicate these details on the invoices. Invoices that do not contain the required information cannot be used in tax-related activities, such as tax assessment, refunds and offsets.

Select the correct commodity and service tax classification code
Since 1 January 2018, taxpayers have been required to select the correct commodity and service tax classification code in the VAT invoice management system for all types of VAT invoices. Once this is done, the commodity class that applies to the code will be automatically indicated on the VAT invoice. The commodity and service tax classification code selected must reflect the actual product and applicable tax rate.

Increase in export value added tax refund rates for certain products

China’s Ministry of Finance and State Administration of Taxation released Caishui [2018] No.123, or ‘Circular 123’, which announced increases to export value added tax (VAT) refund rates for certain products with effect from 1 November 2018.

The new export VAT refund rates are shown in the table below.

*Previous tax rate(s) will still apply if the export date on the customs declaration form is before 1 November 2018.

The export VAT refund rate for two soybean meal products (product codes: No. 23040010 and No. 23040090) has been cancelled.

China retrospectively expands scope of withholding tax policy for foreign investment

The Ministry of Finance, State Administration of Taxation, National Development and Reform Commission and Ministry of Commerce retrospectively expanded the scope of a policy on exempting profits received by an overseas investor from a resident enterprise in China from withholding tax if such profits are used for direct investment within the country with effect from 1 January 2018.

Now, the scope not only covers industries where foreign investment is encouraged, but also all other sectors where it is not prohibited. However, the scope does not cover investments relating to the increase in, conversion into and acquisition of a listed company’s shares.

Beijing recommends 8.5% increase in wage for local employees

Beijing Municipal Bureau of Human Resources and Social Security recommended an 8.5% increase in wage for local employees in its corporate wage guidelines for 2018.

It also recommended upper and lower limits on wage growth of 13% and 4% respectively.

Minimum monthly wages exceed RMB2,000 in seven locations

Minimum monthly wages exceeded RMB2,000 at seven locations in China, with the highest level in Shanghai, according to an announcement by the Ministry of Human Resources and Social Security in October. The details are shown in the table below.

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