China, Malaysia Agree on Tax Exemptions
The two Asian countries sign an exchange letter to reduce tax burden; plus, other news from China.
On November 1, 2016, the Director of the State Administration of Taxation of China (SAT) and the Secretary General of the Malaysian Ministry of Finance signed an exchange letter between the government of the People’s Republic of China (PRC) and the government of Malaysia on the Agreement on Taxation. The document further clarifies matters concerning tax exemptions detailed in the Tax Agreement between China and Malaysia, and will act to reduce the tax burden and financing cost of crossborder taxpayers between the two countries. The meeting between China and Malaysia also covered topics such as education, agriculture, customs, and defense, and served to encourage cooperation, stability, and development between the two countries.
9 Regions Raised Minimum Wage Standards
The Ministry of Human Resources and Social Security (MOHRSS) of the PRC held a press conference on October 25, 2016, in which the topic of minimum wage standards was discussed. The nine regions of Liaoning, Jiangsu, Chongqing, Shanghai, Hainan, Shandong, Tianjin, Hebei, and Beijing have raised their wage standards, with an average growth rate of 10.7%.
Adjustments were made by late September, with Shanghai in possession of the highest monthly minimum wage standard, at RMB 2,190, while Beijing has the highest hourly minimum wage standard of RMB 21. The conference also touched on the adjustment and payment of the old-age pension system. Unification of the pension system has been initiated, and 20 provinces and cities have fully integrated urban and rural residents’ medical insurance.
Financial Auto Exchange Agreement Signed
Hong Kong has signed agreements with Japan and the U.K. with an aim to initiate the automatic exchange of financial account information in tax matters with the two tax jurisdictions in 2018. Hong Kong’s Inland Revenue Department (IRD) has already signed bilateral competent authority agreements with Japan and the U.K., and has inserted these tax jurisdictions into the list of “reportable jurisdictions” under its Inland Revenue Ordinance, which includes all 100 jurisdictions committed to adopting the account information exchange system. Agreements with Japan and the U.K. will lead the way for other jurisdictions committing, which will be instrumental for Hong Kong to maintain its status as a premier international financial center.
NPC Passed Several Key Laws
On November 7, 2016, the National People’s Congress (NPC) Standing Committee of the PRC held a meeting to deliberate the passing of the cyber security draft law, film industry promotion law, draft amendments to the marine environment protection act, private education encouragement law, and the draft interpretation of Article 104 of the Basic Law of the Hong Kong Special Administrative Region (HKSAR). Many effects of these laws are welcomed by investors, as they introduce further transparency into the industries. Meanwhile, Beijing’s interpretation of Hong Kong’s Basic Law is poised to add friction to the already strained relationship between Hong Kong and the mainland.
Original article posted by China Briefing. Since its establishment in 1992, Dezan Shira & Associates has been guiding American investors through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll, and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India, and emerging ASEAN, including liaison offices in Boston and Waltham specifically established to support our American clients, we are your reliable partner for business expansion in Asia and beyond. For inquiries, email us at [email protected]. For further information about our firm and how we can support American investors in Asia, visit our North American Desk.