Last 15 November 2024, China’s Ministry of Finance and the State Taxation Administration released the Announcement No. 15 on the Adjustment of Export Tax Rebate Policies, effective from 1 December. It is set to impact the future business planning of local and foreign companies involved in export operations from China to foreign countries, especially in terms of higher costs and lower export volumes.

Two different sets of adjustments were introduced on China’s export tax rebate, incentive system started in 1985 through which refunds are given to exporters on VAT and consumption tax (CT) paid before the export of their products abroad. The first set provides for the cancellation of the tax rebate on 59 items, including copper and aluminium products (plates, sheets, bars etc.), chemically modified oils and fats, and other kinds of metals.

The second set includes a reduction of the VAT rebate rate from 13% (which entailed a full refund of VAT on purchases, being 13% in China) to 9% for 209 items. Refined oils, batteries, photovoltaic products are among the affected categories.

Seen since its inception as a strategic policy to improve the competitiveness of exported goods in the international market, the VAT Tax Rebate (出口退税) system allows exporters to recover VAT on goods intended for export, receiving the VAT paid on purchases (in full or in part, based on the specific VAT refund percentage defined for each customs code) directly into the company bank account, in a relatively short time (1-2 months) from the submission of the necessary documentation relating to export. The Tax Rebate system is applicable both to companies that carry out trading activities and to the manufacturing companies, with different application rules.

China Visa Exemption Update: Extended Stay and New Eligible Countries

From November 30, 2024, travelers from Italy and nine additional countries recently added to the list – Bulgaria, Romania, Croatia, Montenegro, North Macedonia, Malta, Estonia, Latvia, and Japan – can visit China without a visa for up to 30 days per stay, after the extension of the previous limit of 15 days per stay. This policy is valid until December 31, 2025 and covers purposes such as business, tourism, visiting relatives and friends, transit and exchange visits. This last purpose was newly added.

Key Clarifications:

Multiple Entries: There are no restrictions on the number of visa-free entries or total cumulative days of stay.

Documentation: Travelers should carry relevant documents, such as invitations, flight tickets, and hotel reservations, correspondent with the purpose of their visit.

This update simplifies travel for business and leisure, fostering stronger connections between China and these countries.

New Italy-China Double Taxation Agreement soon in force

On 5 November 2024, the Italian Chamber of Deputies approved the bill for the ratification and execution of the Double Taxation Agreement (DTA) signed in 2019 between the governments of the Italian Republic and the People’s Republic of China regarding income taxes double taxation and the prevention of tax evasion and avoidance. With the Meloni government taking office in October 2022, the bill had to obtain a new approval by the Italian Council of Ministers, and subsequently underwent Parliament discussion. The Agreement will enter into force following the exchange of ratification instruments between the contracting countries, expected by 1 January 2025.

The 2019 Agreement updates the previous DTA signed on 31 October 1986, adapting the latter to the OECD/G20 BEPS Project.

Among the revisions, Article 10 provides for a reduced withholding tax rate from 10% to 5% in relation to dividends from investments participated for at least 25% of the capital, and continuously for 365 days.

Article 11 regulates interests, providing for a reduction to 8% for interests paid to financial institutions for 3 years minimum duration loans aimed at investment projects.

Finally, Article 12 confirms a standard rate at 10% for royalties, with a reduction to 5% for royalties on industrial, commercial or scientific equipment.

Despite the ongoing conflicts over state subsidies and other trade-related issues between the European Union and the People’s Republic of China, in 2024 Beijing proved his willingness to foster and improve its trade relations with many European countries. Among them, Spain has been active in recent years towards strengthening the bilateral exchanges with China, as proved last month when Spanish Prime Minister Pedro Sánchez hold an official visit in the Asian country on 8-11 September.

As China’s fifth-largest trading partner within the EU, Spain has all the interest in promoting mutual openness in the trade environment between the two countries, with a total trade volume that in 2023 reached USD 48.58 billion. The economic ties were strengthened during recent years with a series of agreements, among which a Bilateral Investment Treaty (BIT) in force since 2008, a Double Tax Avoidance Agreement (DTA) in force since 2021, and a Social Insurance Agreement, effective since 2018 , this latter is an agreement that for example other European Nations, as Italy, do not have with China. One of the purposes of Sánchez’s visit was to reinforce mutual investments in a different variety of sectors: in this direction goes the deal, announced by the Spanish delegation and worth one billion dollars, signed with the Chinese Envision Group to build a new hydrogen equipment factory in Spain.

On 8 September, the Ministry of Commerce (MOFCOM) of the People’s Republic of China published the Circular No. 568, concerning the establishment of Wholly Foreign-Owned hospitals in selected pilot cities, namely Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the island of Hainan. This move represents a further development in the process of opening up the country’s health sector to foreign investments, following a similar pilot project that in 2014 introduced the possibility of establishing Wholly Foreign-Owned hospitals. However, due to the stringent requirements imposed on them, the 2014 project mainly prompted foreign investors to channel their resources towards setting up hospitals through Joint Ventures and cooperation agreements with Chinese companies. The new Circular, which do not cover the Chinese traditional medicine field and the mergers and acquisitions of public hospitals, could become a great source of attractiveness for investments in a market of increasing importance, considering the healthcare needs of the rapidly aging Chinese population. To evaluate the effective potential of the new Circular it will be necessary to wait for the specific conditions and requirements, which will be announced separately.

From September 20 to 22, 2024, the COOL CAR SHOW is taking place in Hangzhou, a major exhibition focused on the automotive sector, with an emphasis on car customization, electronic components, and vehicle accessories. The event hosts over 60,000 visitors and 1,000 selected exhibitors, creating the perfect environment to explore automotive innovations.

Among the exhibitors, we were pleased to visit the stand of 𝗠𝗼𝘁𝗼𝗿𝗾𝘂𝗮𝗹𝗶𝘁𝘆, one of our clients, who stands out in the vehicle modification and tuning sector.

The event also features ITA/ICE (Italian Trade Agency) among its organizers, further confirming the importance of international collaboration in this field.

2024 Shanghai Book Fair

The 2024 edition of the Shanghai Book Fair, one of the most important yearly book fairs in Mainland China, organized since 2004, is being held from 14 to 20 August in the heart of Shanghai, hosted again this year at the Shanghai Exhibition Center, the venue of numerous prestigious international and non-international fairs, located directly in front of CPO Shanghai offices.

Offering a vast selection of foreign language books, among the almost 30,000 titles on display, the Fair promotes the interaction between different cultures and languages, presenting itself as a point of reference for anyone who wants, through reading, to begin learning about China or deepen specific interests. Another reason for attraction, perhaps not known to everyone, is the cost of books in China, extremely low, with university texts that for example cost 5-10 euros per book for new editions just printed. For those who happen to be in Shanghai during this period and love reading, visiting the Fair is highly recommended.

China Visa exemption for Italian citizens – No limitations for multiple entries

Regarding the visa exemption for Italian citizens who travel to China for 15 days, valid until 31 December 2025, considering the importance of the policy for those who plan to visit the country for the reasons covered by the exemption, i.e. business, tourism, visiting relatives and friends, and transit, a practical clarification is useful.

The Embassy of the People’s Republic of China in Italy specified how the exemption works in relation to the possibility of multiple entries, requirements for the time interval between each entry, and restrictions on the total cumulative number of days in which one person can stay in China.

Italian citizens who come to China to engage in the activities covered by the exemption are not subject to restrictions on the number of visa-free entries and the total number of days in which they can stay in China. If they wish, they can thus enter multiple times into the country for a period of 15 days for each stay, having the option to leave and re-enter each time by departing from any country or region outside of China.

Travelers to China are advised to keep supporting documents, especially for travelers with numerous entries, such as invitations, airline tickets and hotel reservations in line with the purpose of the visit.

Negociaciones entre China y Perú para un Tratado que evite la doble tributación

A finales de mayo, el ministro peruano de Economía y Finanzas, José Arista, comunicó la noticia de que Perú y China habían concluido la primera ronda de negociaciones para suscribir un tratado destinado a evitar la doble tributación y prevenir la evasión y elusión fiscal. Se espera que en noviembre de este año se inicie una segunda ronda, que podría culminar con la firma y ratificación definitiva entre las partes. El acuerdo afectará a los ámbitos del comercio de bienes y servicios y de las inversiones, alcanzando una mayor integración entre las respectivas economías. El tratado previsto señala la importancia del mercado peruano para China, considerando que la nación asiática es el primer destino de las exportaciones peruanas, por un monto de 23 mil millones de dólares en 2023. En los últimos años, China también ha mostrado interés en invertir en el país, especialmente en los sectores de minería, energía y transporte. El nuevo acuerdo reforzará el marco jurídico institucional ya existente entre China y Perú, que firmaron un Tratado de Libre Comercio en abril de 2009.

The Shanghai Municipality promotes an action plan to facilitate payments for foreigners

The General Office of Shanghai Municipality has released the “Shanghai Action Plan to Further Improve Payment Convenience”, aiming to streamline payment procedures for foreign visitors coming to China.

The expected objectives will concern the following areas:

– Wider acceptance of foreign bank cards at key locations such as restaurants, supermarkets, pharmacies, hospitals, tourist attractions, hotels, transportation centers;

– An increase in the availability of ATMs from which it is possible to withdraw with foreign bank cards and the maintenance of cash payment channels, as well as a greater presence of foreign currency exchange points;

– The optimization of mobile payment services, facilitating the use of payments by “foreign-card bound” on the main local platforms (WeChat Pay, Alipay);

– The simplification of services relating to bank accounts for foreigners, from online appointment for account opening to the provision of multilingual services;

– The creation of dedicated areas in Pudong and Hongqiao airports and in star hotels, where visitors can purchase cards for city transport and exchange currency, receiving local currency even in small denomination;

– Greater communication activity, to promote the new measures to foreigners through the use of guides, promotional videos and dedicated consultancy structures.

The plan proposed by Shanghai is in line with the measures proposed for the entire Chinese national territory. The difficulty of making payments using foreign bank cards represents in fact another barrier, in addition to the linguistic and cultural ones, that visitors arriving in China face, making facilitation in this regard increasingly necessary.

https://www.shanghai.gov.cn/nw12344/20240430/17d55b402ea04e3eadb86983b1850681.html)