In the context of encouraging offshore trade, a new preferential treatment of stamp duty has been issued for enterprises registered in Shanghai Pilot Free Trade Zone and Lingang New Area. At the end of last year, the tax authority also announced the extension of some existing tax benefits.
I. Stamp duty exemption policies on offshore trade in Shanghai Pilot Free Trade Zone and Lingang New Area
In February 2024, the MOF and the STA issued the tax circular Cai Shui [2024] No. 8 to support the development of offshore trade in pilot free trade zones. According to the new preferential policy, the stamp duty is exempted for offshore trade contracts if the taxpayers that carry out the offshore trade are registered in Shanghai Pilot Free Trade Zone and Lingang New Area.
The offshore trade refers to a resident enterprise purchasing goods from a non-resident and reselling them to another non-resident enterprise. The goods do not physically enter or exit the customs territory of China. This policy will be in effect from 1 April 2024 to 31 March 2025.
II. Continued implementation of land appreciation tax preferential treatment in the context of enterprise system reform and restructuring
According to the Announcement [2023] No. 51 issued by the Ministry of Finance (“MOF”) and the State Taxation Administration (“STA”), land appreciation tax exemption policies for enterprises that change the system and conduct restructuring are extended to 31 December 2027.
The extension policies basically keep the key points of the original policies as stipulated in Announcement [2021] No. 21 issued by the MOF and the STA. Companies qualified for land appreciation tax exemption are limited to these that carry on enterprise reform including overall enterprise system reform, enterprise merger, enterprise split and real estate investment as equity. The preferential policy is not applicable if one of the enterprises involved is a real estate development enterprise.
III. Continued exemption of consumption tax on oil products regenerated from waste mineral oil
In September 2023, the MOF and the STA issued the Announcement [2023] No. 69 to continue the exemption of consumption tax on the industrial oil produced with recycled waste mineral oil until 31 December 2027.
To be exempted from consumption tax, all of the following conditions shall be met:
- Enterprise shall obtain the permit for (Comprehensive) Operation of Hazardous Wastes issued by the authority of ecology and environment.
- The raw material shall consist of at least 90% of waste mineral oil.
- Finished products must include lubricating base oil, and the lubricating base oil produced with each ton of waste mineral oil shall not be less than 0.65 tons.
- Products made with waste mineral oil shall be accounted separately from products made with other raw materials.
This policy is proposed to support and promote the comprehensive utilization of resources and environmental protection.
How can we help you?
Eloise Yao
Director
