- Administrative Measures for Private Equity Investment Fundraising
- Agreement on Avoidance of Double Taxation between China and Indonesia
OUR INSIGHTS |
Nationwide Social Security Premium Reduction and Policy Trend
Old Rates Before Adjustment | New Rates After Adjustment | |||
Company | Individual | Company | Individual | |
Pension | 21% | 8% | 20% | 8% |
Medical | 11% | 2% | 10% | 2% |
Unemployment | 1.5% | 0.5% | 1% | 0.5% |
Work Injury | 0.5% | 0 | 0.2–1.9% | 0 |
Maternity | 1% | 0 | 1% | 0 |
- The government is considering the extension of pension benefits in Shanghai to the rest of the country. If this plan is implemented, pension benefits would be similar across difference provinces in China. This means many Shanghai residents who originally came to the city from other provinces might return to their home town instead to seek new employment and enjoy comparable pension benefits after retirement. Consequently, this would reduce the pension burden on employers in Shanghai.
- The government has proposed the combination of maternity insurance and medical insurance, which, if implemented, may lower the social insurance contributions by employers.
- As the economy grows, the government may lower social insurance contribution rates further, reducing the financial burden on enterprises in this area.
TAX |
Interim Administrative Measures for Real Estate VAT
On 31 March 2016, the State Administration of Taxation announced interim administrative measures for the collection of real estate value added tax (VAT) from taxpayers. These measures have been in effect since 1 May 2016 and are described in the table below.
Taxpayer | Type of Real Estate | Tax Payable | Tax Declaration |
General VAT payer | Real estate acquired on or before 30 April 2016 (not built by the taxpayers themselves) — may choose to apply the simplified calculation method | Provisional tax payable = (Total consideration + relevant extra charges - the purchase price or original value of real estate acquired) ÷ (100% + 5%) x 5% | Tax filing on a net basis at the collection rate of 5%. The tax paid based on provisional tax filing shall be deductible for formal filing. |
Real estate acquired on or before 30 April 2016 (built by the taxpayers themselves) — may choose to apply the simplified calculation method | Provisional tax payable = (Total consideration + relevant extra charges) ÷ (100% + 5%) x 5% | Tax filing on the gross amount at the collection rate of 5%. The tax paid based on provisional tax filing shall be deductible for formal filing. | |
Real estate acquired on or before 30 April 2016 (not built by the taxpayers themselves) — may choose to apply the general calculation method | Provisional tax payable = (Total consideration + relevant extra charges - the purchase price or original value of real estate acquired) ÷ (100% + 5%) x 5% | Tax filing on the gross amount at VAT rate of 5%. The tax paid based on provisional tax filing shall be deductible for formal filing. | |
Real estate acquired on or after 1 May 2016 (not built by the taxpayers themselves) — shall apply the general calculation method | |||
Real estate acquired on or before 30 April 2016 (built by the taxpayers themselves) — may choose to apply the general calculation method | Provisional tax payable = (Total consideration + relevant extra charges) ÷ (100% + 5%) x 5% | ||
Real estate acquired on or after 1 May 2016 (built by the taxpayers themselves) — shall apply the general calculation method | |||
Small-scale taxpayers | Real estate (other than residential buildings purchased by individuals) not built by the taxpayers themselves | Provisional tax payable = (Total consideration + relevant extra charges - the purchase price or original value of real estate acquired) ÷ (100% + 5%) x 5% | Tax filing on a net basis at the collection rate of 5%. The tax paid based on provisional tax filing shall be deductible for formal filing. |
Real estate (other than residential buildings purchased by individuals) built by the taxpayers themselves | Provisional tax payable = (Total consideration + relevant extra charges) ÷ (100% + 5%) x 5% | Tax filing on the gross amount at the collection rate of 5%. The tax paid based on provisional tax filing shall be deductible for formal filing. | |
Individuals (including self-employed industrial and commercial households without general VAT taxpayers status) | Transfer of second-hand residential properties subject to VAT on the gross amount | Provisional tax payable = (Total consideration + relevant extra charges) ÷ (100% + 5%) x 5% (Individuals other than self-employed industrial and commercial households are only required to file VAT with the supervising local tax bureau where the real estate is located according to the formula above; no further filing with the supervising national tax bureau is required.) | Tax filing on the gross amount at the collection rate of 5%. The tax paid based on provisional tax filing shall be deductible for formal filing (applicable to self-employed industrial and commercial households only). |
Transfer of second-hand residential properties subject to VAT on a net basis | Provisional tax payable = (Total consideration + relevant extra charges - the purchase price) ÷ (100% + 5%) x 5% (Individuals other than self-employed industrial and commercial households are only required to file VAT with the supervising local tax bureau where the real estate is located according to the formula above; no further filing with the supervising national tax bureau is required.) | Tax filing on a net basis at the collection rate of 5%. The tax paid based on provisional tax filing shall be deductible for formal filing (applicable to self-employed industrial and commercial households only). |
The announcement above clarifies the implementation of real estate VAT in China. Taxpayers should be aware of the VAT treatment and adopt the correct method.
CORPORATE ADVISORY |
Administrative Measures for Private Equity Investment Fundraising
Asset Management Association of China announced administrative measures for private equity investment fundraising (the “Measures”), which will take effect from 15 July 2016.
The Measures stipulate a comprehensive set of industry standards and commercial rules in relation to the fundraising parties, fundraising procedures, account supervision, information disclosure, determination of qualified investors, risk disclosure, cooling-down period, confirmation on return visits, and legal liability of the fundraising institutions and their employees involved in the process of private fundraising.
We are of the view that these Measures will promote the healthy development of the PRC private equity funds industry.
Agreement on Avoidance of Double Taxation between China and Indonesia
The State Administration of Taxation recently announced an Agreement on the Avoidance of Double Taxation between the People’s Republic of China and the Republic of Indonesia (the “Agreement”).
The Agreement has been in effect since 16 March 2016 and applies to income obtained on and after 1 January 2017. It is expected to help in the reduction of tax burdens on enterprises and facilitate economic and trade cooperation between China and Indonesia.
HUMAN RESOURCES |
Interim Residence Permit Regulations for Non-native Citizens
At the end of 2015, the State Council issued interim regulations governing residence permits for non-native citizens in Shanghai, which have been in effect since 1 January 2016. Many areas in China, such as Hebei, Jilin, Tianjin, and Jiangxi, also implemented these regulations in April this year. According to recent proposals by the government, these will also apply to the rest of the country in the future.
- Compulsory education;
- Basic public employment services;
- Basic public health and family planning services;
- Public cultural and sports services;
- Legal aid and other legal services;
- Application for a driver’s licence;
- Processing formalities of entry and exit clearance in accordance with rules and regulations of the People’s Republic of China;
- Processing formalities of replacement or issuance of new ID cards in accordance with national rules and regulations; and
- Other basic public services as prescribed by the Chinese government
ABOUT US |
Serving growing businesses since 1985, RSM in Singapore is the largest accounting, business advisory and solutions group outside the Big 4, with a total staff strength of over 950 in Singapore and 320 in China.
Our China Practice is dedicated to helping you venture into China smoothly and supporting you in navigating its complex regulatory and business environment.
As a member of RSM International, the world’s 6th largest accounting and consulting network, we also have a global reach of over 800 offices in 120 countries.
CONTACT US |
Website: https://www.rsm.global/singapore/
Email: [email protected]
Adrian Tan, Partner and Industry Leader, China Practice
T +65 6594 7876
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Donald Ho, Partner
T +65 6705 7148
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Tan Lee Lee (Ms), Director
T +86 21 6186 7602
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Yeo Lee Soon, Director
T +86 10 8591 1900
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