Circular on Tax Policies for Supporting the Opening of Crude Oil and Other Such Commodities Futures Markets to Foreign Investors

(Issued by the Ministry of Finance, the State Administration of Taxation and the China Securities Regulatory Commission on, and effective as of, March 13, 2018.)

Cai Shui [2018] No. 21

Finance departments (bureaus), offices of the State Administration of Taxation and local taxation bureaus of the provinces, autonomous regions, municipalities directly under the central government and cities with independent development plans, and the Finance Bureau of the Xinjiang Production and Construction Corps:

With a view to supporting the opening of crude oil and other such commodities futures markets to foreign investors, we hereby notify you of relevant tax policies as follows:

1 . Where a foreign institutional investor (including a foreign brokerage) does not have an establishment in China, or although it does have such an establishment, the income derived by it is not actually connected to its establishment, the income (excluding income from the delivery of the commodity) derived by it from the trading of crude oil futures in China shall provisionally be exempt from enterprise income tax; the commission income derived by an offshore brokerage from the provision to foreign investors abroad of Chinese domestic crude oil futures brokerage services does not constitute service income sourced in China and is exempt from enterprise income tax.

2 . The income derived by an individual investor located abroad from investing in crude oil futures in China shall provisionally be exempt from individual income tax for three years from the date on which crude oil futures are opened to foreign investors.

3 . For other commodities futures the opening to foreign investors of which is approved by the State Council, matters shall be handled in accordance with the tax policies set forth herein.

4 . This Circular shall be effective as of the date of issuance.