Singapore

Now! China — April 2019

OUR INSIGHTS

• China considers punitive damages in all intellectual property rights laws

TAX

• Preferential tax treatment for small and micro-sized enterprises

CORPORATE ADVISORY

• Compulsory registration on new website against money laundering and terrorism financing

HUMAN RESOURCES

• Shanghai adjusts contribution bases for social insurance and housing provident fund

• New regulations prohibit recruitment discrimination against women

• Higher average salary in two-week period after Spring Festival

OUR INSIGHTS

China considers punitive damages in all intellectual property rights laws

While intellectual property rights (IPRs) laws in China provide for statutory and compensatory damages, only the Trademark Law currently provides for punitive damages. The Trademark Law states that those found guilty of “serious malicious” trademark infringement would be liable to pay additional damages ranging from one to three times the statutory damages.

As it is difficult to assess the actual losses due to IPR infringement, compensatory damages awarded to plaintiffs are often insufficient in covering such losses. Statutory and compensatory damages in China also do not adequately deter malicious IPR infringements. In response, the legislative branch is considering the inclusion of punitive damages in all IPR laws to address these issues.

TAX

Preferential tax treatment for small and micro-sized enterprises

On 17 January 2019, the Ministry of Finance and State Administration of Taxation jointly released a circular (Caishui [2019] No.13, or ‘Circular 13’) on the implementation of preferential tax treatment for small and micro-sized enterprises (SMEs) to encourage their development. Details of ‘Circular 13’, which apply from 1 January 2019 to 31 December 2021, are as follows:

Value Added Tax (VAT) exemption
Small-scale VAT taxpayers that derive monthly sales of RMB100,000 or less may be exempt from VAT.

Preferential Corporate Income Tax (CIT) treatment
Eligible SMEs enjoy a 75% reduction in the first RMB1 million of annual taxable income for CIT calculation, and a 50% reduction for annual taxable income above RMB1 million up to RMB3 million. The applicable CIT rate in both situations is 20%.

SMEs must meet the following criteria to enjoy the preferential CIT treatment:

  • Not engaged in any restricted or prohibited industries in China
  • Annual taxable income not exceeding RMB3 million
  • Headcount not exceeding 300
  • Total assets not exceeding RMB50 million
CORPORATE ADVISORY

Compulsory registration on new website against money laundering and terrorism financing

Institutions that provide internet finance services legally in China were required to register and report all large or suspicious transactions since the start of this year to the People’s Bank of China on a new website by 31 January 2019. Thereafter, they are required to report such transactions on the website, which supports monitoring efforts against money laundering and terrorism financing, in a timely manner.

This regulatory requirement applies to businesses involved in online lending, equity crowdfunding, sale of funds on the Internet, Internet-based insurance, Internet-based trust services and Internet-based consumer finance, as well as intermediaries for online lending information.

HUMAN RESOURCES

Shanghai adjusts contribution bases for social insurance and housing provident fund

Shanghai’s new maximum and minimum contribution bases for social insurance and the housing provident fund for fiscal year 2019 have been in effect since 1 April 2019 and will expire on 30 March 2020.

The social insurance and housing provident fund contribution bases are usually the same and once in effect, cannot be changed during their validity period. Details for Shanghai are shown in the tables below.

Category Employer Employee
Contribution Rate
(% of Base)
Max Base (RMB) Min Base (RMB) Contribution Rate
(% of Base)
Max Base (RMB) Min Base (RMB)
Social Insurance Pension 20 23,496 4,699 8 23,496 4,699
Medicare 9.5 2
Unemployment 0.5 0.5
Work Injury 0.1–0.95
Maternity 1
Housing Provident Fund 5–7 1,645 169 5–7 1,645 169
Supplementary Housing Provident Fund 1–5 1,175 121 1–5 1,175 121

New regulations prohibit recruitment discrimination against women

In February 2019, the Chinese government announced new regulations that prohibit gender discrimination in recruitment planning, the release of recruitment information and hiring with the aim of ensuring equal employment opportunities for women. Prohibited activities include the following:

  • Restricting (except where the job scope requires only female employees) or giving priority to a certain gender in recruitment ads
  • Restricting female employment or refusing to employ female candidates on the grounds of gender
  • Asking women about their marriage and childbirth
  • Including a pregnancy test in the physical examination of new employees
  • Putting restrictions on childbirth as an employment condition
  • Imposing recruitment requirements on female candidates that are stricter than those for men for the same job

The notice also stated that employers or human resource services agencies found guilty of violating these regulations would be liable to a fine of more than RMB10,000 but less than RMB50,000. In addition, they would be subject to administrative penalties and placed on an official blacklist.

Higher average salary in two-week period after Spring Festival

The two-week period after the Spring Festival is typically a peak recruitment season in China. This year, the average salary offered by employers in China during that period was RMB8,165, up 5% when compared with the same period in 2018, according to Zhilian Recruitment, a major Chinese human resource services agency. While there were 4% more job seekers and 14% more job vacancies during the same period this year, employers also hired 4% less candidates.

Beijing recorded the highest average salary nationwide of RMB10,910 during that period, followed by Shanghai at RMB10,231. Suzhou in eastern China saw the greatest increase of 11.1% to RMB7,751.

The securities industry’s average salary of RMB11,955 was the highest nationwide, followed by the trust industry at RMB10,651. In contrast, the average salary in the printing industry of RMB6,167 is the lowest among all industries.

ABOUT US

RSM is the seventh largest audit, tax and consulting network globally. In Singapore, we are the largest outside the Big 4, serving internationally active businesses.

We focus on growing businesses, helping them to improve profits, enhance business value and internationalise.

We provide audit, tax, advisory, as well as business support services.

Our China Practice is dedicated to helping you venture into China smoothly and supporting you in navigating its complex regulatory and business environment.

CONTACT US

Website: www.RSMSingapore.sg

Email: Info@RSMSingapore.sg

Chan Weng Keen, Partner & Co-head, China Practice
T +65 6594 7864
chanwengkeen@RSMSingapore.sg

Ng Thiam Soon, Partner & Co-head, China Practice
T +65 6594 7809
tsng@RSMSingapore.sg

Tan Lee Lee, Director, China Practice
T +86 21 6186 7602
tanleelee@SBASF.com

Yeo Lee Soon, Director, China Practice
T +86 10 8591 1900
yeoleesoon@SBASF.com