James Cheng
On February 6, 2016, the State Council promulgated the Decision on Amendments to Specific Administrative Laws (State Council Directive No. 666; hereinafter, the “Decision”), which, starting from the day of promulgation, amends 66 administrative provisions pertaining to administrative approval, price reform and comprehensive tariff reduction. Amendments relating to general companies and foreign investment are highlighted below.
(1) The registration fees for the registration of enterprise legal persons, companies or individual industrial/commercial entities are cancelled
The provisions requiring the payment of registration fees for the establishment and amendment registration of enterprise legal persons, companies and individual industrial/commercial entities under Article 26 of the Administrative Regulations of the People’s Republic of China on the Registration of Enterprise Legal Persons, Article 55 of the Administrative Regulations of the People’s Republic of China on the Registration of Companies, and Article 13 of the Regulations on Individual and Commercial Households were deleted by the Decision.
(2) Foreign-invested insurance companies are allowed to engage in reinsurance ceded-in or ceded-out businesses
The Decision revised Article 20, Paragraph 1 of the Administrative Regulations of the People’s Republic of China on Foreign-invested Insurance Companies as: “Except with the approval of the China Insurance Regulatory Commission, a foreign-invested insurance company shall not engage in asset transactions or other transactions with its affiliated enterprises.” As a result, the previous prohibition on “reinsurance ceded-in or ceded-out businesses” in the provision is now deregulated to foreign investors.
(3) A license will be granted prior to the grant of a permit for the registration of a foreign-invested telecommunications enterprise
The Decision revises Article 16 of the Administrative Regulations on Foreign-invested Telecommunications Enterprises as: “After the main Chinese investor of a foreign-invested telecommunications enterprise has applied to the administrative agency for industry and commerce for enterprise registration pursuant to the Certificate of Approval of Foreign-invested Enterprises, it may present such Certificate to administrative agency for industry and information technology for a telecommunications business operation license.” After the adjustment, the process for setting up a foreign-invested telecommunications enterprise is: foreign capital review and approval_enterprise registration_business approval.
(4) Taxpayers eligible for tax reduction or exemption are no longer required to go through the tax exemption formalities
The Decision deletes the first part of Article 43, Paragraph 1 of the Implementation Rules for the Law of the People’s Republic of China on Tax Collection Administration, which provides: “Taxpayers eligible for tax reduction or tax exemption pursuant to law, administrative regulations or the statutory review authoritiesÕ approval shall present the relevant documents to the tax authorities for proceeding with the tax reduction or exemption formalities. “Therefore, taxpayers who enjoy tax reduction or tax exemption pursuant to the aforementioned three bases are no longer required to go to the tax authorities for proceeding with the tax exemption formalities before receiving the tax benefits.
(5) Foreign accreditation and certification agencies seeking to set up representative agencies in the territories of China no longer require approval
The Decision deletes Article 13 of the original Regulations of the People’s Republic of China on Accreditation and Certification, which stipulates that a foreign accreditation and certificate agency seeking to set up a representative agency within the territories of the People’s Republic of China require the prior approval of the accreditation and certification authorities first. After the provision is amended, a foreign accreditation and certification agency only needs to register with the administrative agency for industry and commerce before it may engage in promotional activities relating to the business scope of its affiliated agencies. A point of caution is that representative agencies are still not allowed to provide accreditation or certification activities.