Legislation roundup: securities dealers, consumption tax regulations and insurance assets
August 03, 2012 | BY
clpstaff &clp articles &The China Securities and Regulatory Commission issued Measures for securities investments by QFIIs, lowering the qualification thresholds. China Insurance Regulatory Commission also released Measures forcing insurance companies to set up separate accounts for its assets.
Capital Markets
China Securities Regulatory Commission, Provisions on Issues Relevant to the Implementation of the 〈Measures for the Administration of Securities Investments in China by Qualified Foreign Institutional Investors〉
QFIIs can now use three securities dealers at the Shenzhen and Shanghai stock exchanges to trade securities. The limit on the total holdings of A shares of a single listed company by all QFIIs is now increased from 20% to 30% of the listed company's total shares. The qualification thresholds for QFIIs have also been relaxed. Commercial banks are now required to have managed securities assets of not less than US$5 billion instead of US$10 billion in the previous financial year.
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Further reading:
Tax
Ministry of Finance and State Administration of Taxation, Circular on Interpretation on a Relevant Article of the 〈Implementing Rules for the PRC Tentative Regulations on Consumption Tax〉
The Circular clarifies that if the entrusting party of processing trade sells the products at a price higher than the selling price of the entrusted party, it will not be regarded as direct sale and the entrusting party is required to pay consumption tax though the tax amount already paid by the entrusted party on its behalf may be deducted.
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Further reading:
PRC Tentative Regulations on Consumption Tax (Revised)
Insurance
China Insurance Regulatory Commission, Tentative Measures for the Administration of the Allocation of Insurance Assets
Insurance companies are required to set up separate accounts for their assets. They need to bear partial or total investment risks of ordinary accounts while independent accounts allow the proposer or the beneficiary to be directly connected to all the investment proceeds.
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