Circular Number Issuance Date Effective Date Topic What is new? SAT Announcement  No. 22 2018-04- 27 2018-01- 26 Effectiveness of the new SinoCambodian Double Taxation Treaty and the associated protocol The Announcement stipulates that the new SinoCambodian Double Taxation Treaty (“DTT”) and the associated protocol signed on 13 October 2016 entered into force on 26 January 2018 and are applicable to the incomes received on and after 1 January 2019. The key points that are worth attention of the new DTT mainly include the following: • For assessment of a permanent establishment (“PE”) for construction services, assembly and installation services, as well as relevant supervision and management services, the time threshold is “more than 9 consecutive months”. For assessment of a PE relating to operation of big-scale machinery for prospection and extraction of natural resources, the time threshold is “more than 90 days consecutively or aggregately during any consecutive 12 month period”. • The agency PE includes the situation where a person habitually stores goods in a contracting state and represents an enterprise of the other contracting state to deliver goods from the storage. • Incomes derived from a contracting state by an enterprise of the other contracting state by carrying out international / inner water transportation business via shipping vessels shall be subject to only 50% of original total tax payable. • The dividend withholding tax (“WHT”) rate shall not exceed 10% in the event that the shareholder is the beneficial owner of the dividend. • The interest WHT rate shall not exceed 10% in the event that the shareholder is the beneficial owner of the interest incomes. WHT exemption is granted to the cases where the interest is paid to parties or financial institutions with governmental background of the other contracting state. • The royalty WHT rate shall not exceed 10% if the recipient in the other country is the beneficial owner of the royalty incomes. • The WHT rate applicable to technical services shall not exceed 10% of total technical service fees. Technical service fees refer to any remuneration relating to provision of management, technical and consulting services (including technical services provided by enterprises or other personnel), but excluding labour services defined in Article 15 of the DTT • Remuneration and salaries paid by a tax resident enterprise of a contracting state to its board members and the senior managers as tax residents of the other contracting state can be taxed in the contracting state. Caishui  No. 51 2018-05- 07 2018-01- 01 Updated policy for deduction of employees’ education expenditures for Corporate Income Tax (“CIT”) purpose According to the Circular, employees’ education expenditures within 8% (as opposed to 2.5% previously stipulated by the CIT regulations) of total salary expenses of the company can be deducted from the taxable incomes for CIT purpose. Any excessive amount can be carried forward for deduction in the following years. Caishui  No. 54 2018-05- 07 2018-01- 01 Preferential policies for depreciation of equipment and instruments According to the Circular, during the period from 1 January 2018 to 31 December 2020, purchase cost of newly acquired equipment and instruments with unit price under RMB 5 million can be deducted in a one-off manner (without depreciation) from the taxable incomes for CIT purpose. Equipment and instruments above refer to the fixed assets other than real estate and construction buildings. Caishui  No.55 2018-05- 14 2018-01- 01 Preferential taxation policy on venture capital firms and individual angel investors This Circular is a nationwide extension of the pilot taxation policy on venture capital firms and individual angel investors (the “Pilot Policy”) promulgated in the circular Caishui  No. 38. The preferential taxation policy shall now be applicable nationwide. The existing preferential taxation policy on venture firms and individual angel investors investing into newly-established technological companies under the Pilot Policy has been fully inherited by the Circular. The Circular shall be retroactively effective from 1 January 2018, while the preferential taxation policy for individual angel investors shall apply from 1 July 2018. SAT Announcement  No. 24 jointly released by the State Administration of Taxation and the General Administration of Customs 2018-05- 11 2018-06- 01 Import VAT of leased aircrafts To optimize the administration of taxation as well as to reduce the tax burden regarding import of leased aircrafts, starting from 1 June 2018, the Customs will stop levying import VAT on the import of leased aircrafts. Caishui  No. 50 2018-05- 03 2018-05- 01 Reduction and exemption of stamp duty on accounting books To reduce the taxation burden, the following policy shall apply from 1 May 2018: • Capital account books previously subject to stamp duty rate at 0.05% shall be taxed at half; • Other account books previously subject to stamp duty at RMB 5 per book shall now be exempted from stamp duty. Shui Wei Hui Announcement  No. 3, released by the Tariff Committee of the State Council 2018-05- 22 2018-07- 01 Reduction of import duty rates of certain automotive vehicles and components According to the Announcement, starting from 1 July 2018, import duty rates of certain automotive vehicles and components shall be reduced as follows: • For 135 types of automotive vehicles (whole vehicle), the import duty rate shall be reduced from the current 25% to 15%; • For 4 types of automotive vehicles (whole vehicle), the import duty rate shall be reduced from the current 20% to 15%; • For 79 types of vehicle components, the import duty rates shall be reduced from the current 8%, 10%, 15%, 20% and 25% respectively to 6%.