Risky Business: China Issues New Rules on Permanent Establishment Risk for Foreign Business in China

2 April 2011
Many foreign companies are unaware that their business may be subject to Chinese corporate income tax if such business creates a Permanent Establishment (PE) in China. In a recent notice, the State Administration of Taxation clarifies in great detail how PE conditions apply to a foreign company’s domestic activities, and gives local tax bureau’s better […]
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China Strengthens Administrative Enforcement of Patent Infringements

2 March 2011
China’s patent owners have two legal remedies to tackle infringements: the civil lawsuit or the administrative action. However, since administrative departments lost the authority to decide on compensation for damages of infringement under the amended PRC Patent Law of 2001, the number of administrative actions has gradually decreased. This may be about to change. Administrative […]
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China's Turnover Taxes Revised

22 February 2011
After the Enterprise Income Tax of the People’s Republic of China on 1 January 2008 unified China’s corporate income tax system, China has since the start of this year implemented a second wave of tax reforms, this time involving the three types of turnover taxes: BT (business tax) – levied on service income, the transfer […]
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Conflicting Intellectual Property Rights

20 February 2011
Businesses around the world have been receiving phone calls, faxes, and emails from Chinese domain name registration companies, with news that a third party is trying to register a domain name with the same name as their own name/trademark. These businesses are advised that to protect their rights, they should act quickly to register their […]
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SAIC to Penalize Fraudulent or Unfair Contracts

20 February 2011
Foreign companies and their subsidiaries that source from or distribute to businesses or consumers in China are wise to confirm their transactions with Chinese counterparts in a detailed commercial contract. This will not only ensure there is clarity on the rights and obligations of the parties, but the more details are agreed upon on paper, […]
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Increased Penalties for Invoice Fraud

20 February 2011
In China, a simple receipt does not suffice to record a purchase in a company’s accounting books. Only official tax invoices (called fapiao in Chinese) are accepted, making fraud with these invoices a particular problem to (foreign) businesses operating in China. In recent years, efforts to combat invoice fraud have been intensified, as exemplified by […]
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Pursuing Claims in Chinese Employment Disputes

20 February 2011
In a recent case, a German-invested company in Shanghai terminated the employment agreement with one of their managers, but then failed to pay compensation as agreed in the termination agreement. Settlement negotiations failed, and so the manager had no choice but to turn to arbitration. With our help, he claimed for compensation due under the […]
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China and BVI Exchange Tax Information

20 February 2011
The British Virgin Islands (BVI) are the second largest source of foreign direct investment into China. Many foreign companies use this tax haven to establish their holding structure, while many Chinese companies and individuals use BVI entities to park their (trading) income. The effectiveness, on 31 December 2010, of a treaty on the exchange of […]
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Corporate Governance: Global Values vs. Local Practices

20 February 2011
[The below text is an extract from Chapter 10 (Corporate Governance) of “Chinese Commercial Law: A Practical Guide”. Published in October 2010 by Kluwer Law International, author Maarten Roos (Managing Director of R&P China Lawyers) wrote this book for foreign managers with operations in China. It is available through the publisher (www.kluwerlaw.com) or in online […]
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Winding Up Your Business in China

20 February 2011
While China has done relatively well to weather the strong negative trends of the global economic recession, it has certainly not been left unscathed. One consequence which has emerged is a significant increase in the number of foreign invested enterprises pressed with the urgency to liquidate their assets, whether voluntarily or through the bankruptcy system. […]
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