By Tony Dong and Daisy Duan   King & Wood Mallesons’ Taxation Group invoice plays an indispensable role in economic activity and business operations in China. It also plays an important role in tax scrutiny when tax authorities are collecting taxes and combating tax evasion. It is reported that in 2013, the tax authorities investigated 91,000 cases of selling or producing false invoices or the illegal issuing of invoices  and 130 million illegal invoices were uncovered. Invoice-related non-compliance is found frequently in certain industries such as real estate, construction and installation, medicine and medical equipment, power generation and supply, catering and entertainment, and the education or training industry. The tax authorities have identified 89,000 entities that have illegal invoices issues, and they are pursuing taxes of more than RMB 13.8 billion.
Continue Reading Tax Issues on Receiving Falsely Issued Invoices in “Good Faith”

By Mark Schaub Chen Bing King & Wood Mallesons’ FDI Group Shanghai Office.

State Administration of Taxation of the PRC (“SAT”) promulgated the Administrative Rules on Income Tax for Policy-based Relocation of Enterprises on August 10, 2012 (“Rule 40″) which is set to become effective on October 1, 2012.   Policy based relocation refers to relocations at the request of the authority rather than voluntary relocations by enterprises (see below for more details).

Rule 40 aims at establishing more specific and systematic rules in terms of preferential tax treatments which apply to policy-based relocations. This new rule will replace the Circular on Relevant Issues concerning Enterprise Income Tax on Incomes from Policy-based Relocation or Disposal of Assets promulgated by State Administration of Taxation on March 12, 2009 (“Circular 118”).Continue Reading New Enterprise Income Tax Rule in relation to Enterprise Relocation