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The Chinese Ministry of Commerce (‘‘MOC’’) released on 30 July 2018 a draft on the amended Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies (the ‘‘Draft’’), which aims at further opening the Chinese market to foreign investors. The Draft is set to revise the existing laws and regulations (the ‘‘Existing Measures’’), in effect since 30 January 2006, and proposes looser restrictions on strategic foreign investments into Chinese listed companies, in line with the new regulatory regime and China’s economic development strategies.

Over the past few years, the Central Government has implemented various measures to streamline governmental approval process on foreign investments in China’s strategic sectors in order to enhance market entry and attract foreign capitals.

The State Council published on 28 July 2018 the Circular GuoFa [2018] No. 28 (the ‘‘Circular’’), abolishing 11 administrative licenses in China, among which the work permit for Taiwan, Hong Kong and Macao residents (‘‘THKM’’).

Under the Circular, THKM residents will be treated the same as local mainland Chinese residents and will thus no longer need work permits to work in Mainland China.

Previously, under the Administrative Regulations on Employment of Taiwan, Hong Kong and Macau Residents in Mainland, a Chinese company was required to obtain prior-approval from the city-level authorities before hiring a THKM resident. The would-be employer was required to submit various supportive documents, including but not limited to the business license, the employee’s health certificate, and his/her valid travel document.

Hong Kong recently announced record-breaking fiscal surplus of 138 billion HKD from the 2017-18 fiscal year. This is mostly thanks to high revenue from profits tax, land sales, stamp duties and salaries tax. Last year was indeed exceptional for the Asia’s world city, as its economy grew by 3.8% and unemployment rate reached a 20-year low of 2.9%.

The Financial Secretary proposed in his budget speech to share with the community about 40% of the surplus and use the remaining 60% for improving government services and investment in the future.

A two-tiered profits tax rates regime was proposed by the Hong Kong Government during the last quarter of 2017 and the relevant Inland Revenue (Amendment) (No.7) Bill 2017 (the "Bill") was gazetted and introduced to the Legislative Council early this year. Subject to the enactment of the legislation, the two-tiered tax rates will apply starting from the year of assessment 2018/19 (i.e. 1 April 2018 to 31 March 2019). The salient features of the new tax regime are as follows:

  • Under the proposed two-tiered system, the first HK$2 million of assessable profits for corporations and unincorporated businesses will be taxed at half of the current tax rate, i.e. 8.25% and 7.5% respectively. The remaining assessable profits will be taxed at the current full tax rates of 16.5% and 15% for corporations and unincorporated businesses respectively. The proposed Bill is constructed in a way that the two-tiered profits tax rates regime will apply to all relevant entities by default, except connected entities as discussed in the next bullet point.