In February 2017, China revised its Corporate Income Tax (CIT) Law (Article 9) dealing with tax deductions for charitable donations. This states that charitable donations made by an enterprise are deductible up to 12% of the enterprise’s gross annual profit. However, where donations exceed 12% of the profit in a year then the tax deductions for the excess are lost. As a development on this, under the revised CIT law, charitable donations exceeding 12% of gross annual profit are allowed to be carried forward and be deducted from the taxable income of an enterprise over the following 3 years (see KPMG China Tax Weekly Update (Issue 8, March 2017) for details).
Further to this, on 11 February 2018, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) jointly issued Cai Shui  No.15 (“Circular 15”), setting out the detailed implementation rules, which apply retroactively from 1 January 2017:
At the 10 November 2017 China-US economic cooperation meeting, Mr. Zhu Guangyao, deputy minster of finance, indicated that China will significantly lower the entry threshold for foreign investments in the financial sector (such as investments made in securities, fund management, futures and insurance companies).
Subsequently, the China Banking Regulatory Commission (CBRC) reaffirmed the said relaxation and also indicated that China will remove the foreign equity ownership holding requirement for Chinese-funded banks and financial asset management companies. At present there is a 20% limit for a single foreign investor and a 25% limit for foreign investors collectively.
Following the planned changes, both foreign investors and domestic private investors making investments in banks (which are generally state owned enterprises) will be subject to the same equity limit rules (see KPMG China Tax Weekly Update (Issue 45, November 2017) and (Issue 49, December 2017) for details).
On 24 February 2018, CBRC issued the revised Implementation Rules for Administrative Licensing for Foreign-invested Banks (CBRC Order  No. 3, “Order 3”). Order 3 supersedes the 2014-issued rules (CBRC Order  No. 6) and came into effect from its date of issuance (i.e., 24 February 2018).
Compared to the 2014-issued rules, Order 3 makes the following notable changes:
On 28 December 2017, the MOF, SAT, National Development and Reform Commission (NDRC), and Ministry of Commerce (MOFCOM)) jointly issued Cai Shui  No. 88 (“Circular 88”). This established a withholding tax (WHT) deferral incentive for profit reinvestment in China. Subsequently, on 2 January 2018, SAT issued SAT Announcement  No. 3 (“Announcement 3”), setting out implementation rules for the WHT deferral incentive (see KPMG China Tax Weekly Update (Issue 1, January 2018) and (Issue 3, January 2018) for details).
Further to this, on 27 February 2018, the SAT held a webcast and further clarified implementation issues, using a range of practical examples.
The SAT tax official giving the webcast also clarified that where a distributed profit payment is used for multiple purposes, clear delineation needs to be made. For example, take the case of a foreign investor which receives a RMB300 million dividend from a Chinese resident enterprise and uses RMB200 million for increasing the paid-in capital of another China resident enterprise. The remaining RMB100 million, remitted out of China, was not used for investment purposes. Under this scenario, RMB200 million would be eligible for WHT deferral treatment while the RMB100 million would be subject to dividend WHT (usually 10% before treaty relief).
The tax official clarified that there are no requirements concerning the extent to which the encouraged activities contribute to the profits of the invested enterprise.
The tax official further clarified that the relief can also be retroactively applied, even if the WHT was paid before 1 January 2017.
For a more detailed analysis and interpretation of Circular 88, you may read the following KPMG publication: