Two Departments Announce Preferential Individual Income Tax Policy for the Guangdong-Hong Kong-Macao Greater Bay Area
Recently, the Ministry of Finance («MOF») and the State Taxation Administration («STA») have jointly issued the Circular on the Preferential Individual Income Tax Policy for the Guangdong-Hong Kong-Macao Greater Bay Area (the «Circular»), retrospectively effective from January 1, 2019 till December 31, 2023. The Circular reads that:
- Guangdong Province and Shenzhen will offer subsidies to overseas high-level talent and urgently-needed talent (including those from Hong Kong, Macao and Taiwan, the same below) who work in the Guangdong- Hong Kong-Macao Greater Bay Area (the «Greater Bay Area»), according to the difference between the amount of individual income tax levied by the Mainland and by Hong Kong, and such subsidies are exempt from individual income tax;
- The determination of the scope of overseas high-level talent and urgently-needed talent who work in the Greater Bay Area, and the subsidy measures, shall be locally governed by relevant provisions of Guangdong Province and of Shenzhen;
- This Circular will apply to nine Pearl River Delta cities of Guangdong Province within the Greater Bay Area, including Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing.
Promotion of Foreign Investment
The Foreign Investment Law provides for national treatment for foreign investors operating in the PRC and sets out several broad principles for promoting foreign investment, which include:
- a system of pre-entry national treatment plus a negative list for foreign investment will be implemented (Article 4);
- the state’s policies supporting enterprise development are equally applicable to FIEs (Article 9);
- FIEs are guaranteed fair competition and products produced and services provided by FIEs in the PRC shall be treated equally in government procurement (Article 16);
- FIEs may raise funds through public offerings, corporate bonds, and other means (Article 17);
- local governments, acting in accordance with law, administrative regulations, and local laws and regulations, and within their statutory authority, may formulate foreign investment promotion and facilitation policies and measures, and governments at all levels will further improve their services for foreign investment by simplifying procedures, improving efficiency and optimizing government services (Articles 18 and 19).
Under administrative regulations previously issued by the Ministry of Commerce (MOFCOM), a system of pre-entry national treatment plus a negative list for foreign investment has already been essentially in place nationwide since late 2016, with the nationwide negative list updated most recently in July 2018, so it remains to be seen what changes if any to the existing system are contemplated by the Foreign Investment Law.
Similarly, although existing government procurement laws and regulations already contain provisions on fair treatment and non-discrimination with respect to government procurement generally, foreign investors have long complained of local favoritism in government procurement.
Therefore, it is hoped that detailed implementation and stricter enforcement of these general provisions in the Foreign Investment Law will lead to changes in the actual procurement practices of local governments and stateowned entities.
