The Chinese government is looking to foster greater use of private pensions through individual income tax (IIT) regime changes. To this end, China is putting in place an exemption-exemption-taxation (EET) system, similar to those in use in many other countries, such as the US 401K regime. This is being piloted in Shanghai, Fujian and Suzhou Industrial Park from 1 May 2018, and applies to so-called “voluntary commercial endowment plans” (see KPMG China Tax Weekly Update (Issue 15, April 2018) for details).
Under the pilot system: (i) contributions to an eligible commercial endowment insurance plan, which are deposited in an individual retirement account (IRA), are allowed to be deducted for IIT purposes, subject to certain limits. This makes the income contributed to the plan effectively “exempt” at the time of contribution; (ii) investment gains generated by the funds in the IRA are treated as tax exempt; and (iii) IIT applies when the amounts in the IRA are withdrawn at retirement.
To complement this, on 28 April 2018, the State Administration of Taxation (SAT) issued Announcement  No. 21 (“Announcement 21”), which provides further clarifications:
With regard to the details and impact of the pilot IIT preferential treatment for commercial endowment plan, please read KPMG China Tax Alert (Issue 10, April 2018).
In recent years, the government has implemented a program of replacing administrative pre-approvals with simple recordal requirements, coupled with targeted and effective follow up audit and review. In the CIT space, it was already announced in 2015, in SAT Announcement 76, that pre-approvals for enjoyment of CIT preferential treatments would be fully replaced by simple recordal requirements.
On 25 April 2018, the SAT issued Announcement 23 abolishing the recordal requirement. Instead, a new simplified method will be used to manage the CIT preferential items, which applies from the 2017 CIT annual filing onwards.
Building on Announcement 76, Announcement 23, makes changes to:
On 19 April 2018, the Ministry of Finance (MOF) and SAT jointly issued Cai Shui  No. 38 (“Circular 38”). This extends the existing value-added tax (VAT) incentives for the animation industry as set out in the 2013-issued Cai Shui  No. 98 (“Circular 98), which expired on 31 December 2017.
The content of Circular 38 remains unchanged when compared to Circular 98. In particular, Circular 38 clarifies:
In relation to key corporate tax issues that “going out” enterprises may face, and how the Chinese authorities are supporting Chinese enterprises to navigate through these overseas tax challenges, please read the following KPMG publication:
On 28 April 2018, China Securities Regulatory Commission (CSRC) issued CSRC Order No. 140 with the finalised Administrative Measures on Foreign-invested Securities Enterprises (the “2018 Measures”).
Before the finalisation, CSRC had solicited public comments on the draft measures in March 2018 (see KPMG China Tax Weekly Update (Issue 11, March 2018) for details).
In comparison with the draft measures, there are no significant changes in the finalised 2018 Measures. The 2018 Measures make revisions to the 2012-issued Rules on Establishment of Foreign-invested Securities Companies (the “2012 Measures), including:
CSRC has updated the relevant administrative guidance for establishing securities companies following the 2018 Measures. When an eligible foreign investor intends to set up a JV securities companies, both of the 2018 Measures and the guidance should be read together, when making an application.
At the China-US economic meeting held in November 2017, China also made commitments on: (i) removing the foreign equity ownership holding requirement for Chinese-funded banks and financial asset management companies; (ii) relaxing the foreign investor equity holding limit for life insurance companies; and (iii) reducing customs duty for imported automobiles (see KPMG China Tax Weekly Update (Issue 45, November 2017) for details).