Legislation roundup: FTZ forex registration procedures, cross-border loan security provision and tax exemptions for NPOs

Free trade zone

Shanghai Branch of the State Administration of Foreign Exchange, Implementing Rules for Foreign Exchange Control to Support the Establishment of the China (Shanghai) Pilot Free Trade Zone
国家外汇管理局上海市分局支持中国（上海）自由贸易试验区建设外汇管理实施细则

The Rules simplify the procedures for foreign exchange registration in relation to direct investment, delegating to banks the authority to carry out the procedures for foreign exchange control registration and amendment of registration in connection with direct investment. They relax the upper limit on loans extended abroad by enterprises in the FTZ, abolish examination and approval requirements for claims in connection with offshore lease financing and permit rent to be charged in foreign currencies by the domestic lease financing business. They improve the pilot foreign exchange control policies with respect to the centralised operation and management of foreign exchange by the headquarters of multinational corporations, of foreign currency fund pools and of international trade settlement centres.

See the digest for more details.

Further reading
General Plan for the China (Shanghai) Pilot Free Trade Zone
Opinions on Financial Support for the Establishment of the China (Shanghai) Pilot Free Trade Zone
A window into the future


Foreign exchange

State Administration of Foreign Exchange, Provisions on Foreign Exchange Control in Connection with the Cross-border Provision of Security (Draft for Comments)
国家外汇管理局跨境担保外汇管理规定 (征求意见稿)

The Draft greatly narrows the scope of control over the amounts involved in the provision of domestic security for foreign loans, while only maintaining control over the scale of the domestic financing type of provision of security for foreign loans of financial institutions, and also changes the prior determination of limits to “self-regulation of percentages”. With respect to the provision of foreign security for domestic loans, the creditor must be a financial institution in China, the debtor may not be a financial institution and the secured debt may only be an ordinary loan or line of credit denominated in either renminbi or foreign currency.

See the digest for more details.

Further reading
Circular on Issues Concerning the Administration of the Provision of Security to Foreign Parties by Organisations in China
Tentative Measures for the Administration of Financing Security Companies


Tax

Ministry of Finance and State Administration of Taxation, Circular on Issues Relevant to Administration of the Determination of the Tax Exempt Qualifications of Non-profit Organisations
财政部、国家税务总局关于非营利组织免税资格认定管理有关问题的通知

In order to enjoy tax exemption, any qualified non-profit organisation is required to submit a tax-exempt qualification application to the competent provincial-level tax authority of the place where it is located. The tax-exempt qualifications of a non-profit organisation are valid for five years.

See the digest for more details.

Further reading
PRC Enterprise Income Tax Law
Implementing Regulations for PRC Enterprise Income Tax Law