The State Administration of Taxation (“SAT”) issued Announcement on Issues Concerning ‘Beneficiary Owners’ in Tax Treaties, SAT  No. 9, effective from April 1, 2018 (“Announcement 9”), which replaced the former Guo Shui Han  No. 601 and SAT  No. 30 by revising the ‘adverse factors’ for the assessment of beneficiary owners (“Assessment”), widening the scope of the ‘safe harbor’ rules, and allowing ‘look through’ for the Assessment with certain conditions, etc. Moreover, the SAT has issued an interpretation to Announcement 9 for further clarifications (“Interpretation”).
On April 17, 2018, the National Development and Reform Commission of China (“NDRC”) published on its official website a news release announcing that China will remove foreign shareholding restrictions in automobile, shipbuilding and aircraft manufacturing industries.
Directors and representatives of the main Spanish companies with presence in the Chinese capital also attended the seminar organized by Garrigues Beijing Office.
This issue of Tax China Newsletter mainly includes: (1) Certain types of distributed profits re-invested in resident enterprise by overseas investors will enjoy beneficial tax deferral policy (Announcement of the State Administration of Taxation (“SAT”)  No. 3 and Cai Shui  No. 88); (2) The definition of the beneficial owner in tax treaties has been further clarified under Announcement of the SAT  No. 9; (3) Announcement of the SAT  No. 11 has further clarified a number of issues in the implementation of double taxation treaties; (4) The SAT issued the Announcement of the SAT  No.46 regarding the country by country report; and (5) Implementation Regulations of Environmental Protection Tax Law is in effect since January 1, 2018.
China is experiencing a certain decrease in foreign investment resulting, amongst other reasons, from the increasing labor and other costs. The State Administration of Taxation, the Ministry of Finance, the Ministry of Commerce and the National Development and Reform Commission, have jointly launched a new tax preferential policy for overseas investors, Cai Shui (2017) No. 88, Circular on Policy Issues concerning Temporarily Not Levying the Withholding Tax on Distributed Profits Used by Overseas Investors for Direct Investments in order to boost the economy, further encourage foreign investments, and promote continuing operations within China on a long-term basis. The new tax policy allows the foreign investors to temporarily defer the withholding taxes on distributed profits that are re-invested directly into China, if certain conditions are met.
On May 19, 2017, following the negotiations commenced in 2011, the Social Security Agreement between the Kingdom of Spain and the People’s Republic of China was formally signed. The signing took place during the meeting of G-20 labor ministers in Bad Neuenahr (Germany) and was formalized between China’s Human Resources and Social Security Minister, Mr. Yin Wimin, and Spain’s Employment and Social Security Minister, Ms. Fátima Bañez.
On August 25, 2017, China’s Supreme People’s Court (the “SPC”) issued the Provisions on Certain Issues Concerning the Application of the Company Law of the People’s Republic of China (IV) (“Interpretation IV”), which came into effect on September 1, 2017.
On May 19, 2017, the State Administration of Taxation (“SAT”), the Ministry of Finance, the People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, as well as the China Insurance Regulatory Commission issued an announcement on the Administrative Measures of Tax Information Due Diligence for Financial Accounts of Non-residents (“Announcement 14”) to implement the information exchange (“IE”) of financial accounts between China and other participated countries or jurisdictions.