The Chinese State Council set 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 2017 including 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.
In 2017, China encompassed a reform in the Free Trade Zone (FTZ) which includes:
To widen the area of Shanghai Free Trade Zone, the state council has issued an overall plan for the new Lingang area of the China (Shanghai) Pilot Free Trade Zone. Other than the aforementioned points, this new area will also complete with the most competitive free trade zones worldwide and implement opening-up policies and systems with strong global market competitiveness.
The new area will facilitate overseas investment and capital flows and realize the free flow of goods. Further to attract more investor, income tax plan to be levied at a reduced rate of 15 percent within five years from establishment for qualified enterprises engaged in manufacturing and R&D in key fields including integrated circuits, artificial intelligence, biomedicine and civil aviation.
China will study and implement subsidy policies for the balance of personal income tax on overseas talents, and explore tax policy arrangements for pilot free trade accounts under the prerequisite that does not lead to tax base erosion and profit shifting.
Source: China Daily
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