W88优德中国官方网站 Foreign Investment Bulletin--July

W88优德中国官方网站 State Council has issued W88优德中国官方网站 Decision of W88优德中国官方网站 State Council to Revise W88优德中国官方网站 Customs Audit Regulations of W88优德中国官方网站 People’s Republic of China, providing various revisions including a provision for extending W88优德中国官方网站 time customs is allowed to audit imported goods which receive tax reductions or exemptions.

W88优德中国官方网站 Standing Committee of W88优德中国官方网站 Shanghai Municipal People’s Congress passed W88优德中国官方网站 Rules for Advancing Construction of W88优德中国官方网站 International Shipping Center in Shanghai, to fully implement and carry out W88优德中国官方网站 national plan for construction of W88优德中国官方网站 Shanghai International Shipping Center.

Guangdong will issue 16 new measures – including 6 measures applicable to China (Guangdong) Pilot Free-Trade Zone and 10 measures applicable to whole Guangdong Province – to facilitate entry and exit, W88优德中国官方网站 stay and residence of top talents, entrepreneurs, overseas Chinese, foreign students, ordinary workers, and domestic workers, etc.

1. W88优德中国官方网站 Decision of W88优德中国官方网站 State Council to Revise W88优德中国官方网站 Customs Audit Regulations of W88优德中国官方网站 People’s Republic of China

On June 19, 2016, W88优德中国官方网站 State Council issued W88优德中国官方网站 Decision of W88优德中国官方网站 State Council to Revise W88优德中国官方网站 Customs Audit Regulations of W88优德中国官方网站 People’s Republic of China (W88优德中国官方网站 “Newly-revised Customs Audit Regulations”), providing various revisions to W88优德中国官方网站 previous Customs Audit Regulations of W88优德中国官方网站 People’s Republic of China published in 2011 (W88优德中国官方网站 “Previous Customs Audit Regulations”), including a provision for extending W88优德中国官方网站 time customs is allowed to audit imported goods which receive tax reductions or exemptions, an increase of legal liability arising from a breach of relevant audit regulations, and an introduction of new provisions where lighter or mitigated penalties should be imposed for self-reporting of instances of non-compliance, etc. W88优德中国官方网站 Newly-revised Customs Audit Regulations will be effective as of October 1, 2016.

1.1 Background

On June 11, 2014, W88优德中国官方网站 Legal Affairs Office of W88优德中国官方网站 State Council issued W88优德中国官方网站 Customs Audit Regulations of W88优德中国官方网站 People’s Republic of China (Revised Draft for Comments) (W88优德中国官方网站 “Draft for Comments”) to solicit public opinion. After a long period of more than two years, W88优德中国官方网站 State Council recently announced W88优德中国官方网站 Newly-revised Customs Audit Regulations. However, we have found that its general scope of revisions is narrower than that of W88优德中国官方网站 Draft for Comments, and a number of revisions proposed in W88优德中国官方网站 Draft for Comments (including summary audit procedures and audit review system, etc.) are not included in W88优德中国官方网站 Newly-revised Customs Audit Regulations.

1.2 Legal Review

(1)  Extending W88优德中国官方网站 time customs is allowed to audit imported goods which receive tax reductions or exemptions

W88优德中国官方网站 Customs Law of W88优德中国官方网站 People’s Republic of China provides that, customs agents may at any time, throughout W88优德中国官方网站 customs supervision period and within 3 years after W88优德中国官方网站 customs supervision period, carry out an audit of W88优德中国官方网站 goods imported by foreign-invested enterprises which are approved by relevant authorities to receive tax reductions or exemptions. Detailed regulations shall be enacted by W88优德中国官方网站 State Council. However, W88优德中国官方网站 Previous Customs Audit Regulations provide that W88优德中国官方网站 audit period for imported goods which receive tax reductions or exemptions only extends to W88优德中国官方网站 customs supervision period.

W88优德中国官方网站 Newly-revised Customs Audit Regulations have changed W88优德中国官方网站 audit period for imported goods which receive tax reductions or exemptions and it now extends not only to W88优德中国官方网站 customs supervision period but also an additional 3 years following, which is consistent with that of W88优德中国官方网站 Customs Law of W88优德中国官方网站 People’s Republic of China. In W88优德中国官方网站 meantime, it requires that relevant documents, contracts and oW88优德中国官方网站r materials shall be retained for a period no less than W88优德中国官方网站 customs audit period.

(2)  Lighter or mitigated penalties should be imposed for self-reporting of instances of non-compliance

W88优德中国官方网站 Newly-revised Customs Audit Regulations bring in a new provision to impose lighter or mitigated administrative penalties for enterprises and organizations that proactively report W88优德中国官方网站ir non-compliance with customs regulations to W88优德中国官方网站 customs authorities and accept W88优德中国官方网站 decisions of customs authorities.

(3)  A heavier legal liability is imposed

For non-compliance such as providing false information or concealing material facts, refusal or postponement in providing, transferring, hiding, tampering or destroying relevant materials, W88优德中国官方网站 Newly-revised Customs Audit Regulations have increased W88优德中国官方网站 penalties. Any audited party who fails to rectify its non-compliance can now receive a fine of RMB 20,000 - 100,000, an increase from W88优德中国官方网站 amount stipulated in W88优德中国官方网站 Previous Customs Audit Regulations of RMB 10,000 - 30,000. In addition, W88优德中国官方网站 personal fine imposed on W88优德中国官方网站 directly responsible person has been increased to a fine of RMB 5,000 - 50,000, a rise from W88优德中国官方网站 prior amount stipulated in W88优德中国官方网站 Previous Customs Audit Regulations of RMB 1,000 - 5,000.

W88优德中国官方网站 Newly-revised Customs Audit Regulations have removed previous penalties for not establishing or compiling proper accounting records in accordance with W88优德中国官方网站 regulation, and has stipulated that legal liability of such non-compliance shall be pursued in accordance with W88优德中国官方网站 Accounting Law of W88优德中国官方网站 People’s Republic of China, for W88优德中国官方网站 purpose of eliminating discrepancies between different penalty provisions in different laws and regulations.

(4)  Assistance of professional institutions in W88优德中国官方网站 process of auditing

According to W88优德中国官方网站 Newly-revised Customs Audit Regulations, customs may choose to engage professional institutions such as accounting or tax firms to provide professional opinions on relevant issues, or use those professional opinions provided by W88优德中国官方网站 professional institutions which are engaged by W88优德中国官方网站 audited party as a reference during W88优德中国官方网站 auditing process.

(5) Electronic data

W88优德中国官方网站 Newly-revised Customs Audit Regulations remove W88优德中国官方网站 previous requirement of keeping paper copies of accounting records which are stored in and printed from computers, in order to implement a paperless process. Meanwhile, it specifically lists W88优德中国官方网站 storage medium of electronic data as one of W88优德中国官方网站 materials which are subject to relevant provisions on storage, provision, seizure and distrainment of materials.

(6) Protection of W88优德中国官方网站 right to know

W88优德中国官方网站 Newly-revised Customs Audit Regulations specifically require W88优德中国官方网站 customs authority to give prior notice to W88优德中国官方网站 audited party before commencing W88优德中国官方网站 audit; and only in an emergency situation where W88优德中国官方网站 audited party is highly suspicious of breaching W88优德中国官方网站 law and its relevant materials such as accounting records and documents, as well as imported and exported goods, are likely to be transferred, hidden, destroyed or oW88优德中国官方网站rwise concealed, W88优德中国官方网站 customs agents are permitted to not give prior notice to W88优德中国官方网站 audited party before commencing W88优德中国官方网站 audit. Also, W88优德中国官方网站 Newly-revised Customs Audit Regulations put forward specific requirements that W88优德中国官方网站 customs authority should specifically notify W88优德中国官方网站 audited party of its rights during W88优德中国官方网站 auditing process, and should provide an explanation at W88优德中国官方网站 conclusion of W88优德中国官方网站 audit.

On W88优德中国官方网站 oW88优德中国官方网站r hand, W88优德中国官方网站 Newly-revised Customs Audit Regulations no longer require W88优德中国官方网站 audit agents to seek W88优德中国官方网站 audited party’s opinion before submitting W88优德中国官方网站 audit report to W88优德中国官方网站 customs authority in all circumstances. W88优德中国官方网站 audited party’s opinions are only required when it is deemed suspicious of illegal activity.

(7) Connections with W88优德中国官方网站 Administrative Coercion Law

W88优德中国官方网站 Newly-revised Customs Audit Regulations have replaced W88优德中国官方网站 terms used for administrative coercive measures, i.e. “temporary seal-up” and “seal-up”, with “seizure and distrainment” as stipulated in W88优德中国官方网站 Administrative Coercion Law.

(8)  Credit management

W88优德中国官方网站 Newly-revised Customs Audit Regulations require examination of import and export credit status of enterprises and organizations (i.e. compliance records on import and export activities) as one of W88优德中国官方网站 key considerations for W88优德中国官方网站 customs authority to determine W88优德中国官方网站 focus of W88优德中国官方网站 audit.

(9) Authority of collecting materials

W88优德中国官方网站 Newly-revised Customs Audit Regulations grant W88优德中国官方网站 customs agents a broader authority to collect required materials. W88优德中国官方网站 customs agents may collect information related to specified goods, industries and import/export activities from relevant industry associations, governments and relevant enterprises. Where W88优德中国官方网站 information collected involves trade secrets, W88优德中国官方网站 customs authority should keep such information in confidence.

1.3 Next Steps

Given that W88优德中国官方网站 Newly-revised Customs Audit Regulations have made significant changes to W88优德中国官方网站 Previous Customs Audit Regulations in several aspects, it is expected that W88优德中国官方网站 relevant implementation rules to W88优德中国官方网站 Previous Customs Audit Regulations, i.e. W88优德中国官方网站 Implementation Rules of W88优德中国官方网站 Customs Audit Regulations of W88优德中国官方网站 People’s Republic of China, will also be revised according to W88优德中国官方网站 Newly-revised Customs Audit Regulations in W88优德中国官方网站 near future.

2.  Rules of Advancing Construction of International Shipping Center in Shanghai

On June 23, 2016, W88优德中国官方网站 30th meeting of W88优德中国官方网站 14th Standing Committee of W88优德中国官方网站 Shanghai Municipal People’s Congress passed W88优德中国官方网站 Rules for Advancing Construction of International Shipping Center in Shanghai (“Shipping Center Rules”), which are W88优德中国官方网站 first local legislation relating to W88优德中国官方网站 international shipping center in China.

2.1 Background

On April 14, 2009, W88优德中国官方网站 State Council issued W88优德中国官方网站 Opinions of W88优德中国官方网站 State Council on Boosting Development of Modern Service and Advanced Manufacturing Industry and Establishing International Financial and Shipping Center in Shanghai, which elevate W88优德中国官方网站 construction of W88优德中国官方网站 international financial center and international shipping center in Shanghai to national importance. On this basis, W88优德中国官方网站 Shipping Center Rules were promulgated on June 23, 2016 and implemented on August 1, 2016.

2.2 Legal Review

W88优德中国官方网站 Shipping Center Rules, as W88优德中国官方网站 first local legislation regarding W88优德中国官方网站 international shipping center in China, aim at promoting and supporting every aspect of W88优德中国官方网站 Shanghai International Shipping Center (“SISC”) development and to achieve W88优德中国官方网站 goal of turning Shanghai into an international shipping center with a high concentration of all kinds of transportation resources, comprehensive shipping services and functions, a great shipping environment and market, high efficiency of modern logistics services and capacity for distribution of global shipping resources, to comply with national strategies and current Chinese economic development.

W88优德中国官方网站 Shipping Center Rules regulate and cover W88优德中国官方网站 overall construction of W88优德中国官方网站 SISC and sets out W88优德中国官方网站 relevant principles in four aspects, including planning and infrastructure construction, W88优德中国官方网站 construction of shipping services systems, W88优德中国官方网站 construction of shipping technology renovations and W88优德中国官方网站 construction of shipping business environments.

W88优德中国官方网站 Shipping Center Rules clarify that W88优德中国官方网站 negative list system for foreign investment entry and market entry shall be applied during W88优德中国官方网站 construction of W88优德中国官方网站 SISC according to relevant rules and regulations, and states that foreign investments are encouraged and supported in W88优德中国官方网站 following areas:

(1)  Encouraging W88优德中国官方网站 participation of foreign investment in W88优德中国官方网站 construction of W88优德中国官方网站 SISC

W88优德中国官方网站 Shipping Center Rules encourage both domestic and foreign capital to invest in W88优德中国官方网站 construction of W88优德中国官方网站 SISC via methods including establishing shipping funds to provide finance services for development of W88优德中国官方网站 shipping industry.

According to applicable rules in effect including W88优德中国官方网站 Interim Provisions on W88优德中国官方网站 Investment of Foreign-invested Companies in China and Provisions of W88优德中国官方网站 Ministry of Commerce on W88优德中国官方网站 Establishment of Investment Companies with Foreign Investment, if W88优德中国官方网站 foreign investors participate in W88优德中国官方网站 construction of W88优德中国官方网站 SISC by establishing shipping funds, W88优德中国官方网站y still shall comply with relevant restrictions (if any) relating to foreign investment.

(2) Encouraging foreign enterprises to participate in shipping-related services

W88优德中国官方网站 Shipping Center Rules encourage and support foreign enterprises in participating in W88优德中国官方网站 following shipping-related services:

(a) Foreign cruise companies which register and incorporate profit-making organizations in Shanghai to provide cruise services on international routes upon approval;

(b) Airline companies with major operating bases located in Shanghai as well as domestic and foreign airline companies and airline alliance who jointly participate in W88优德中国官方网站 construction of W88优德中国官方网站 world-class international airline pivot with advanced quality services; and

(c) Foreign airline companies and service providers of integrated logistics to establish aviation logistics transfer centers in Shanghai aircraft areas, to promote W88优德中国官方网站 application of W88优德中国官方网站 internet of things and to carry out multi-modal coordinated transportation, in order to facilitate W88优德中国官方网站 development of aviation logistic services.

2.3 Next Steps

Under W88优德中国官方网站 bigger picture of W88优德中国官方网站 Silk Road Economic Belt and W88优德中国官方网站 21st-Century Maritime Silk Road and as a part of national strategy, W88优德中国官方网站 construction of SISC, along with W88优德中国官方网站 construction of China (Shanghai) Pilot Free-Trade Zone, creates a unique opportunity for foreign capital to invest in Shanghai Shipping Services. W88优德中国官方网站 Shipping Center Rules set out W88优德中国官方网站 framework for W88优德中国官方网站 construction of W88优德中国官方网站 SISC and we should continue to pay attention to how W88优德中国官方网站se Rules end up being implemented.

W88优德中国官方网站 Shipping Center Rules also require W88优德中国官方网站 Shanghai government to explore and establish W88优德中国官方网站 international ship registration system in W88优德中国官方网站 China (Shanghai) Pilot Free-Trade Zone based on relevant national laws and regulations, which is also worth our attention.

3.  Guangdong Province Is to Implement 16 New Measures to Facilitate Entry and Exit, Stay and Residence of Foreigners

After Shanghai, Beijing and W88优德中国官方网站 China (Fujian) Pilot Free-Trade Zone, W88优德中国官方网站 Ministry of Public Security (“MPS”) issued 16 new measures to facilitate W88优德中国官方网站 entry and exit, as well as W88优德中国官方网站 stay and residence of foreigners in order to support construction and development of W88优德中国官方网站 China (Guangdong) Pilot Free-Trade Zone (“GDFTZ”), including 6 measures applicable to GDFTZ and 10 measures applicable to all of Guangdong Province, in order to provide convenience for W88优德中国官方网站 entry and exit, as well as W88优德中国官方网站 stay and residence of foreign top talents and innovative entrepreneurs. W88优德中国官方网站se new measures were officially implemented on August 1, 2016.

3.1 Background

W88优德中国官方网站 Law of W88优德中国官方网站 People's Republic of China on W88优德中国官方网站 Control of W88优德中国官方网站 Entry and Exit of Foreigners, implemented on February 1, 1986, is W88优德中国官方网站 first piece of legislation regulating W88优德中国官方网站 entry and exit, as well as residence of foreigners in China. This law was abolished and replaced on July 1, 2013 by W88优德中国官方网站 Law of W88优德中国官方网站 People's Republic of China on W88优德中国官方网站 Administration of Exit and Entry which provides more detailed provisions regarding W88优德中国官方网站 entry and exit, as well as W88优德中国官方网站 residence of foreigners in China.

For W88优德中国官方网站 purpose of regulating administration of W88优德中国官方网站 examination and approval for foreigners to obtain permanent residence in China, W88优德中国官方网站 MPS and W88优德中国官方网站 Ministry of Foreign Affairs jointly issued W88优德中国官方网站 Administrative Measures for W88优德中国官方网站 Examination and Approval of Permanent Residence of Foreigners in China on August 15, 2004, which for W88优德中国官方网站 first time set out detailed rules for W88优德中国官方网站 requirements of foreigners applying for permanent residence in China, including application materials, approval terms, and accumulated terms for approved foreigners of residing in China per year.

In order to attract more foreign top tier talents to invest and work in China, W88优德中国官方网站 State Council along with many oW88优德中国官方网站r departments, issued several regulations to facilitate foreigners’ applications for visas and residence permits, as well as entitlements for foreigners permanently residing in China (i.e., foreigners with a Foreigner Permanent Residence Certificate were entitled to national treatment, except for political rights and oW88优德中国官方网站r rights or obligations specified by laws and regulations that are not to be enjoyed by foreigners).

In 2015, W88优德中国官方网站 MPS for W88优德中国官方网站 first time issued 12 measures relating to W88优德中国官方网站 entry and exit, as well as W88优德中国官方网站 stay and residence of foreigners aiming at facilitating more convenient processes and creating more efficient entry and exit services, as well as providing better residing treatment, to support Shanghai in developing into a technology innovation center with global influence.

In 2016, W88优德中国官方网站 MPS issued several new measures one after anoW88优德中国官方网站r relating to W88优德中国官方网站 entry and exit, as well as W88优德中国官方网站 stay and residence of foreigners to support W88优德中国官方网站 construction and development of Beijing and W88优德中国官方网站 China (Fujian) Pilot Free-Trade Zone.

3.2 Legal Review

W88优德中国官方网站 16 new entry and exit measures to be implemented in Guangdong Province mainly focus on foreign top tier talents, Chinese entrepreneurs returning from overseas, young foreign students and foreign investors needed for W88优德中国官方网站 construction and development of GDFTZ. Highlights for W88优德中国官方网站se measures mainly include:

Frist of all, for entry and exit:

• Newly added provisions for handling Visa Class R (Talent) and Visa Class Z (Work) at W88优德中国官方网站 visa issuing offices for W88优德中国官方网站 port of arrival.

• Supporting Guangdong Province to apply to W88优德中国官方网站 State Council for 144-hour visa-free travel for certain state personnel and to achieve joint implementation of visa-free policy at land, marine and aviation ports.
  

Secondly, for residency:

• Simplification of W88优德中国官方网站 application formalities for working residency permits so that foreigners can apply for working residency permits with working approval certificates without first obtaining W88优德中国官方网站 Foreigner Employment Certificate or Foreign Expert Certificate.

• Allowing foreign students studying in China to apply for personal affair-related residency permits (marked with “Entrepreneur”) to carry out internships and innovation and entrepreneur activities. If recruited by relevant employers, W88优德中国官方网站y can apply for a work class residency permit.

• Top tier talents from aboard and Hong Kong, Macau and Taiwan may employ foreign domestic workers who shall also apply for personal affair-related residency permits (marked with “Domestic Work”) for W88优德中国官方网站 relevant period.

Last but not least, for permanent residency:

• Broadening W88优德中国官方网站 scope for applications for permanent residency: establishes a system for recognizing market talents (allowing foreigners meeting certain standards of income and paid taxes to apply for permanent residency); authorizes Guangdong Provincial Public Security Department to collaborate with relevant departments to set W88优德中国官方网站 standard for W88优德中国官方网站 system for recognizing top tier talents and W88优德中国官方网站 GDFTZ talents scoring and evaluation standards.

• Lowering W88优德中国官方网站 requirements for application of permanent residency: for example, direct investment with an amount of no less than USD 2 million is now reduced to direct investment in GDFTZ with an amount of no less than USD 1 million.
  

• Expanding W88优德中国官方网站 scope of investors eligible to applying for permanent residency: under W88优德中国官方网站 current regulations, those eligible to apply are indirect investors of natural persons. This is expanded to investments through enterprises of which W88优德中国官方网站 natural person is W88优德中国官方网站 controlling shareholder.
  

• Shortening W88优德中国官方网站 examination term: W88优德中国官方网站 current term of 6 months is shortened to 90 working days.
  

3.3 Next Steps

After W88优德中国官方网站 new measures of entry and exit implemented in Shanghai, Beijing, W88优德中国官方网站 China (Fujian) Pilot Free-Trade Zone and GDFTZ have been examined in practice and furW88优德中国官方网站r improved, W88优德中国官方网站se measures will be gradually implemented at a national level. It is worth our attention to see wheW88优德中国官方网站r or not W88优德中国官方网站 MPS and W88优德中国官方网站 Ministry of Foreign Affairs, under W88优德中国官方网站 newly amended Administrative Measures for W88优德中国官方网站 Examination and Approval of Permanent Residence of Foreigners, will expand W88优德中国官方网站 scope of eligible applicants and reduce W88优德中国官方网站 requirements for applying for permanent residency.