The advantages of Foreign-funded Enterprises to invest in China

Under the background that the Chinese economy has entered a new normal, the use of foreign capital has also entered a new phase: the intensive introduction of various foreign investment policies and to expand the opening extent for Foreign-funded Enterprises. China’s Foreign Capital Management is constantly doing “subtraction” and creating a fair, equal, and transparent business environment. Tanikawa will analyze the advantages of conducting business operations in China for Foreign-funded Enterprises and Investors from the following four points: The management system of foreign capital continues to deepen China continued to deepen the reform of “Distribution Service”, and established and changed the filing of Foreign-Funded Enterprises that not be included in the “Negative List”, greatly improving the level of facilitation. The continued expansion of Foreign Investment The Ministry of Commerce has proposed 42 measures to expand foreign investment and actively absorb foreign investment, and promote the relevant departments and localities to speed up the formulation of implementation measures and supporting programs. Revised the “Guidance Catalogue for Foreign Investment Industries (Revised in 2017)” and “Special Management Measures for Foreign Investment Access in the Pilot Free Trade Zone (Nagetive List)”, reducing 30 and 27 restrictive measures, respectively, and revising and implementing “Foreigners Investment Advantage Industry Catalog in the Central and Western Regions”, added 139 entries to encourage foreign investment. Foreign investors have effectively stimulated investment in High-End Manufacturing, Modern Service Industry and the central and western regions. Promotion of Free Trade Zone Construction Comprehensively deepening the reform and opening up of Shanghai Pilot Free Trade Zone, based on a thorough review of the experience of the construction of three free trade zones in Guangdong, Tianjin, and Fujian, based on the study of new pilot tasks, and the promotion of the establishment of seven Free Trade Pilot Zones, forming a “1+3+7″ new pattern. Open Carrier Platform Optimization Innovation China is actively establishing the development direction of National-level Economic and Technological Development Zones, insisting on the development of The Real Economy, and now has formed more than 20 billion industrial clusters covering automotive, electronics, and medicine. China provides more investment support for Foreign-funded Enterprises by reducing foreign investment access restrictions, optimizing the business environment, and investing environment. At the same time, China also provides corresponding preferential policies on corporate taxation. 1. For the Technologically Advanced Service Enterprises that have been certified, the enterprise income tax shall be levied at a reduced tax rate of 15%. 2. The profits distributed by foreign investors from Chinese resident enterprises, be directly invested in encouraged investment projects. The enterprises that meet the conditions, the Deferred Taxation Policies shall be implemented, and withholding tax shall not be levied temporarily. 3. Enterprises can choose to calculate separately the amount of taxable income from overseas sources according to the country (region) (ie, “country (region) does not divide items”), or summary calculation that not according to the country (region) (that is, “not divided by country (region)”), shall be calculated their offsetting foreign income tax and credit limit separately according to the tax rate set forth in Article 8 of the Document No. 125 of Caixi [2009]. Once the above method is selected, it must not be changed within 5 years.  
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