China to welcome more foreign investments
Since early this year, the Chinese government has released various circulars to promote and attract foreign investments. The key policies refer to further relaxation of the access restriction on foreign capital, formulation of fiscal and taxation incentives, improvement of the investment environment for state level economic development zones, facilitation of talent entrance and exit, as well as optimizing business environment. The major features are as follows:
- Foreign shareholding restrictions will be relaxed or lifted in certain manufacturing and service sectors.
- Local governments are encouraged to promote headquarters economy.
- Curbs for foreign investors in merger & acquisition transactions will be relaxed.
- China will streamline the formalities for setting up Chinese entities by foreign investors.
- The "negative-list" approach piloted in free trade zones will be rolled out nationwide. That is, foreign investors engaged in activities that are not included in the "negative list" will enjoy the same treatment as domestic investors and hence can enjoy the same simplified entity set-up procedures and formalities.
- No withholding tax will be imposed upon the distribution of profits by Chinese companies to foreign investors for direct reinvestment of projects encouraged by China.
- Tax incentives granted to Advanced Technology Service Enterprises in pilot areas (including the 15% Enterprise Income Tax rate) will be rolled out nationwide.
- China will streamline the working permit/visa process for foreign talents working in China.