CMS, China | Chinese Tax Regulation Update | August 2017
Dear Sir or Madam , Please find enclosed our update on the latest developments on Chinese Tax Law. Kind regards, CMS, China
What is new?
SAT Announcement  No. 25
Effectiveness of the third Protocol of the Sino-Pakistani Double Taxation Treaty
The Protocol was formally signed on 8 December 2016 at Islamabad and came into effect on 24 April 2017. According to the Protocol, interests associated with the loans provided by Industrial and Commercial Bank of China and China Silk Road Fund for the energy projects included the Agreement between the Government of the People's Republic of China and the Government of the Islamic Republic of Pakistan regarding Corporation of Sino-Pakistani Economic Passage Energy Project shall be exempted from Pakistan income tax.
SAT Announcement  No. 26
Clarification of China Country-by-Country (“CbC”) reporting
As a supplementary regulation of the previously released SAT Announcement  No. 42 regarding transfer pricing reporting, this Announcement clarifies the definition of “related parties” mentioned in the CbC reporting forms as part of the annual related party transaction reporting forms. “Revenue of Related Parties” in the CbC reporting forms refers to the total amount of related party transactions conducted between related parties located in a certain tax jurisdiction and the other related parties of the group listed in the List of All the Constituent Entities of the Multinational Enterprise Group by Tax Jurisdiction. This is in line with the recently released OECD regulations regarding CbC reports, which stipulate that “related parties” shall be identical to “group member entities”.
SAT Announcement  No. 29
VAT matters of bonded delivery of crude oil futures through Shanghai International Energy Exchange
This Announcement is a follow-up regulation of SAT Announcement  No.35, according to which bonded delivery of crude oil futures through Shanghai International Energy Exchange Co., Ltd. (“INE”) shall be temporarily exempted from VAT. According to the Announcement, “bonded delivery of crude oil futures through INE” refers to the physical delivery of crude oil, which is supervised under bonded status within the special customs-supervised areas, due to closing of the futures through INE conducted by domestic and overseas organizations. The Announcement clarifies, apart from the definition of “domestic and overseas organizations”, the following administrative measures in implementing the foregoing VAT treatment:
The domestic organizations shall be registered as VAT payers; The domestic organizations shall complete recordal process for VAT exemption treatment at the in-charge tax authorities by submitting written explanation letters when initially reporting for VAT exemption at the tax authorities regarding the boned delivery of crude oil futures; In situations where the seller of the futures of crude oil for bonded delivery is a domestic organization, the seller shall issue normal VAT invoices to the buyer in an amount equal to the amount shown on the INE Bonded Delivery Settlement Document; The domestic organization shall well file all documents, invoices, receipts and certificates related to the transactions on a monthly basis for future reference; In situations where the seller of the futures of crude oil for bonded delivery is an overseas organization, the seller’s member entity shall require relevant payment receipts, etc. as supportive documents for application of VAT exemption.
This information is provided for general information purposes only and does not constitute legal or professional advice. Copyright by CMS, China. For further information, please contact:
Gilbert Shen Senior Associate Head of Tax Practice Area Group CMS, China T +86 21 6289 6363 F +86 21 6289 0731 E firstname.lastname@example.org
This information is provided for general information purposes only and does not constitute legal or professional advice. Copyright by CMS, China.
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