In connection with the release of the Opinions of the State Council on Further Optimizing the Environment for Foreign Investment and Strengthening Efforts to Attract Foreign Investment by the State Council of China on July 25, the Chinese government recently announced the implementation of a series of policies focusing on facilitating foreigners’ stay in China.
We summarize the polices that are of particular relevance and importance to foreign investors.
1. Exemption from Passport Retention for Foreigners’ applying for residence permits, Press Conference of the Ministry of Public Security, 3 August 2023
The Exit-Entry Administration Bureau may not require to keep the original passport after the valid passport has been verified on the spot in accordance with the regulations, in order to make it easier for the foreigner to handle relevant matters with the passport. This policy will in particular facilitate the travel of the applicants during the application period.
Further implementation details of this policy are still to be clarified.
2. Facilitating the issuance of visa for foreign business people at ports of entry into China, Press Conference of the Ministry of Public Security, 3 August 2023
Foreigners who come to China for business negotiations, trade exchanges, installation and maintenance, exhibitions and conferences, investment and entrepreneurship, and who are not able to apply for visas to China from abroad in time, may apply for visas to enter China at the ports of entry by presenting invitation letters by companies and other supporting documents.
Those who need to make multiple round trips for business purposes may exchange their visas for multiple-entry visas for three years after entering China.
3. Announcement on Continued Implementation of Individual Income Tax Policies on Subsidies and Allowances for Foreign Individuals, Ministry of Finance and State Administration of Taxation, 18 August 2023
According to Announcement [2023] No. 29 of the Ministry of Finance and the State Administration of Taxation, Foreign individuals may opt to apply tax exemption policies for allowances such as housing allowance, language course fee, children’s school fee etc.
The tax exemption policy for specific allowances for foreign individuals was firstly stipulated in the Notice on Several Issues Relating to Individual Income Tax Policies (Cai Shui Zi [1994] No. 020) and had a last-minute extension notice on 31 December 2021 for two years ending on 31 December 2023.
This is the second extension after the revision of the Individual Income Tax Law in 2018. The announcement remains in force until 31 December 2027.
4. Announcement on Continued Implementation of Individual Income Tax Policies for Annual One-off Bonus, Ministry of Finance and State Administration of Taxation, 18 August 2023
According to Announcement [2023] No. 30 of the Ministry of Finance and the State Administration of Taxation annual one-off bonus may continue to be taxed separately from the basic salary using the preferential IIT calculation method.
This extension announcement is valid until 31 December 2027. Prior the announcement, the preferential individual income tax policy for one-off annual bonus was expected to expire at the end of 2023.
The Opinions of the State Council on Further Optimizing the Environment for Foreign Investment and Strengthening Efforts to Attract Foreign Investment provide guidance on promoting foreign investment from legal and finance aspects. We expect to see more concrete policies in the spirit of the Opinions in the coming periods.
How can we help you?
Lena Li
Manager
