China Tax Newsletter - May / June 2016

Tax Newsletter

In this issue, we have covered a number of developments and cases in the PRC and Hong Kong which could impose legal and tax implications to your business.

On the PRC side, following the national rollout of the Value-Added Tax (VAT) reform, the State Administration for Taxation (SAT) issued additional clarifications primarily to address the criteria of various VAT incentives across industries and services under the new law. The SAT shows determination to streamline the tax audit procedures by issuing two circulars on the topic. Further, developments have been seen on the preferential enterprise income tax treatments for Software and Integrated Circuits industries, and the long-waited reform on resource tax has finally came out. For the Hong Kong residents working in the PRC, a very good news was announced regarding the application procedures to enjoy treaty benefit.

In Hong Kong, the Hong Kong Special Administrative Region (HKSAR) Government has streamlined the administrative arrangement for the application for Hong Kong Resident Status and entered into double taxation agreements with Romania and Russia. In addition, the Inland Revenue Department (IRD) has updated its Departmental Interpretation and Practice Notes (DIPN) no. 43 and issued DIPN no. 51 to provide clearer guidelines for extension of tax exemption for offshore private equity funds. Further, the IRD issued the tax returns for individuals in May and published its Performance Pledge Annual Report 2015/16. Finally, we wrap up this issue of Tax Newsletter with a brief introduction of the Common Reporting System in Hong Kong. 

We welcome your feedback and any question you may have about this issue of the Tax Newsletter.

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