The State Council on 31 March 2017 issued Guo Fa  No. 23 setting out a new reform plan for the Shanghai Pilot Free Trade Zone (FTZ), which may also indicate the direction of future nationwide reform efforts.
Prior to this, the Shanghai FTZ reform efforts were set out in a general plan in 2013 and a further plan in 2015, including enhanced procedures for trade and investment facilitation. The new 2017 plan builds on existing efforts and puts forward some innovative measures, inter alia, in relation to: (i). cross-border services and trade management; (ii). free trade port areas; (iii). financial services supporting the “Belt and Road” initiative; and (iv). offshore tax structuring.
|Improved supervision of innovative industries||
|Facilitate cross-border services and trade||
|Set up free trade port areas||
|Improve financial services supporting the “Belt and Road” initiative||
|Offshore tax structuring||
* With regard to the relevant laws and regulations issued for FTZs in 2016, you may access KPMG China Tax Weekly Update (Issue 22, June 2016), (Issue 33, August 2016), (Issue 44, November 2016) and (Issue 45, December 2016) for more.
As highlighted in KPMG China Tax Weekly Update (Issue 34, September 2016), Mr. Gao Hucheng, Minister of Commerce, in an interview by Xinhua News on 31 August 2016, said that seven new FTZs are to be set up in Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan and Shaanxi, in addition to the existing FTZs in Shanghai, Guangdong, Tianjin and Fujian.
Subsequently, the State Council approved the establishment of the FTZs and, on 31 March 2017 released the overall plans for Liaoning FTZ, Zhejiang FTZ, Henan FTZ, Hubei FTZ, Chongqing FTZ, Sichuan FTZ and Shaanxi FTZ respectively. The move brings China’s total number of FTZs to 11. The details of each FTZ plan are as follows:
Liaoning FTZ will use market-oriented reforms to transform its old industrial base into a more competitive economy.
Liaoning FTZ consists of three areas - Dalian, Shenyang and Yingkou - with respective focus on:
Zhejiang FTZ will pursue commodities trade liberalization.
Zhejiang FTZ consists of three areas – Certain offshore islands near Zhoushan Island, and then northern and southern parts of Zhoushan Island itself – with the respective focus on:
Henan FTZ will serve as a modern comprehensive traffic hub in the development of the Belt and Road, a pilot zone for general economic reform, and a demonstration zone for open economy measures, in China’s landlocked cities.
Henan FTZ consists of three areas – Zhengzhou, Kaifeng and Luoyang – with the respective focus on:
Hubei FTZ should be built as a demonstration area for clusters of high-tech and strategic new industries.
Hubei FTZ consists of three areas – Wuhan, Xiangyang and Yichang – with the respective focus on:
Chongqing FTZ will serve as a major pivot to interconnect the Belt and Road Initiative and the Yangtze River economic belt and implement the strategy to develop China’s western regions.
Chongqing FTZ consists of three areas – Liangjiang, Xiyong and Guoyuan port – with the respective focus on:
Sichuan FTZ will serve as a gateway to China’s western region for further reform and opening up. It will enhance collaboration between inland areas and those along the coast, rivers and borders, to further stimulate the economic development of the inland areas.
Sichuan FTZ consist of three areas – Chengdu Tianfu new area, Chengdu Qingbaijiang rail depot, and port area in the south of Sichuan (in Luzhou city) – with the respective focus on:
Shaanxi FTZ will be established to set an example for inland opening up, economic cooperation and cultural exchanges under the “Belt and Road” Initiative.
Shaanxi FTZ consists of three areas – Xi’an central area, Xi’an international port area and Yangling demonstration area – with the respective focus on:
On 30 March 2017, the State Administration of Taxation (SAT) issued Announcement  No. 7. This sets out the Measures to Administer the Information Collection for Enterprise Groups falling under the “Thousand Enterprises Initiative” (the “Measures”), which will take effect from 1 May 2017.
The SAT launched the “Thousand Enterprise Initiative” in July 2015. This programme covers about 1,000 representative large enterprises from different industries, including MNEs, state-owned enterprises and private enterprises. The chosen enterprises are given priority access to tax officials at provincial and state level. The idea is that these enterprises can reach beyond the lower level tax authorities, formally responsible for their affairs, and resolve matters at the provincial level. There has been a focus on building up services at the provincial level, with tax authorities encouraged to grant rulings to large enterprises on request, and to assist them with improving their tax control systems. On the whole, it is hoped that this approach will result in more effective tax management and lower disputes. The quid pro quo is that covered enterprises must provide not only tax return and financial statement data, but also information on electronic accounting ledgers and vouchers. This data becomes a key input into tax authority risk analysis models with risk indicators for different industries.
The following matters, in relation to information collected from the covered enterprises, are clarified in the above-mentioned SAT measures:
* For more information about the policies in relation to thousand enterprises and improvement of tax services for large enterprises, please read KPMG China Tax Weekly Update (Issue 4, February 2016) and (Issue 42, November 2016).