Chinese taxation and accounting practices in a nutshell

In the wake of ‘the Reform and Opening up policy’ carried on by Deng Xiaoping in 1979, China’s planned economy turned into a socialist market economy.

Consequently, China has gradually converged its few accounting standards to international standards. However, fully understand financial reporting and accounting practices in China is a challenging task for multinational companies as they may need to carry out reconciliations between Chinese GAAP and the IFRS (International Financial Reporting Standards which equals to U.S. GAAP) for purposes of consolidations of financial statements. Here is an overview of what you should know.

The fapiao system: fapiao as precious as cash

For newly incorporated companies in China, domestic bookkeeping can be a real headache. Most of the newcomers outsource accounting to professional and local tax and accounting firm.

The first thing to know: the fapiao, pronounced fapiao. All business transactions in China are required to be recorded on an official receipt, called in Chinese, fapiao. Without a fapiao for each transaction, it is impossible to declare expenses for reimbursement, tax deduction and refunds. Printed on a special paper, fapiao can only be purchased from the Tax Bureau and are ruled by quotas. The newly created company starts with 25 fapiao, each with a limit of RMB 100,000. However, one can ask the Tax authorities to obtain more fapiaos, up to 75.

This document allows the Chinese government to control and monitor the tax base and remains a proof of the reliability of any financial statements. As soon as a fapiao has been issued and received, the transaction is confirmed. No fapiao issued nullifies the transaction.In some extent, the fapiao system is a very convenient checking system. Thus, remember a fapiao as valuable as cash and must be kept preciously.

From the Business Tax to the Value-Added Tax

China has been moving progressively over the past years from a Business Tax (BT) system to a Value Added Tax (VAT) system in an attempt to streamline China’s indirect tax system with an objective to remove dual indirect tax system and to give Chinese business a better global competitive tax structure in order to boost the economy’s growth.

Now two classes of VAT Tax Payer exist under the B2V Reform:

General Tax Payer (GTP) •     Tax payers providing VAT pilot services with annual turnover ≥ RMB 5M

•     Tax payers providing VAT pilot services with annual turnover < RMB 5M but which voluntarily apply for GTP status.

Small Tax Payer (STP) •     Tax payers providing VAT pilot services with annual turnover < RMB 5M

And the new VAT rates in industries detailed in the VAT reform:

Industry covered under VAT reform VAT applicability
Domestic sales Exemption/ Zero rating
Leasing of tangible movable properties 17% Exemption applies
TRANSPORTATION SERVICES
Transportation service industry (including road, water and air and pipeline transportation services) 11% Zero rating VAT applicable for international transport
MODERN SERVICES
Research & development and technical services 6% Zero rating VAT
IT services 6% Exemption applies
Cultural and creative services 6% Exemption applies; Zero rating VAT applies to design services
Logistics and ancillary services 6% Exemption applies
Certification and consulting services 6% Exemption applies
TELECOMMUNICATION SERVICES
Basic telecom services 11% Exemption applies
Value-added telecom services 6% Exemption applies

Main corporate tax and tax compliance deadlines

Corporate tax Frequency Level Rate
Corporate Income Tax

–          Normal

–          Small Scale

–          High Tech

 

Quarterly

 

State

Local

 

25%

20%

15%

Import Tariffs 14 days before the day of importation State 0-270%
Export Tariffs 24 hours before the export of the good at the customs State 0-40%
Value Added Tax Monthly but before the 15 State 0-17%
Business Tax Monthly but before the 15 Local 3%, 5%, 5-20%

Article written by SJ. Grand, Tax and advisory in China, and edited by China Smei 

See also :

The Chinese fashion is increasingly fashionable

Chinese Fashion booming worldwide

There are more and more emerging designers that inspire the Western brands and parade in Milan and Paris, each interpreting his tradition so

Lately China is always found at the center of the fashion world (also according to a recent market research (by Daxue Consulting, leading in China market entry): not only from the economic point of view, given that – albeit declining – in China there is a big luxury market and garments and designer accessories, but also from a creative point of view: more and more western designers are inspired by Chinese fashion, some brands were purchased in whole or in part by Chinese entrepreneurs – as Italians Krizia or Francesco Scognamiglio – while there are more and more emerging Chinese designers to keep sott ‘ eye. Last September, many of them paraded at Fashion Week in Milan woman, while a few months before Vogue Italy had devoted the number of June 2015 to China, with Chinese models on the cover and services on young designers in Beijing.

The fashion interest in China was also enshrined in the summer exhibition of the prestigious New York Metropolitan Museum of Art (MET): China: Through the Looking Glass, Chinese aesthetics influence on Western fashion. The exhibition has become the most popular museum dedicated to fashion and the fifth most visited so far, and is remembered also for the inauguration, which was presented Rihanna with a long yellow cloak designed by Chinese designer Guo Pei haute couture.

In an article in Forbes magazine, Glenda Thomas writes that many new Chinese designers are working a lot to get known, and are also increasing enrollments of Chinese students to fashion schools. This was confirmed by Gemma Williams, who works at the London College of Fashion, one of the most important European fashion schools and who recently published the book Fashion China (Thames & Hudson), which reports the 41 Chinese designers who believes the most promising. To do so he consulted a bit ‘of experts in the world of Chinese fashion, including the fashion designer Lucy Liu and supermodel Liu Wen. The initial idea was to deal only emerging artists, but the system proved to be much more extensive and complex, and Williams ended up also enter the designers already established.

As in the West, even the Chinese designers dealing peg, clothes for every day, and high fashion, that is, the evening dresses. However, it was difficult for Williams to find uniformity in the style of different designers, because the Cultural Revolution launched by Mao Tse-Tung in 1966 – with the aim to strengthen and impose the vision of the communist party in all aspects of Chinese life – has deleted many traditional and cultural aspects of the country, including the history of costume. Mao has introduced zhongshan for example, a jacket-uniform with four pockets and collar that everyone had to wear the same. Only reforms that have been made since the eighties onwards enabled the birth of the fashion industry and then the emergence of designers, each with a personal interpretation of the traditional Chinese style.

Chinese SEMs to invest in the jewelry market in China

Chinese SEMs to invest in the jewelry market in China

Adopt a style of dress especially helps determine your personality. Indeed, the look is a strong determinant of a person’s character. Many people think that the fashion world just stops wearing clothes diversified. However, note that jewelry are fundamental because they have the opportunity to categorically change your look, not to say that jewelry is the key fashion accessories to succeed to have an original and authentic look your way. The jewels are most popular and which are still valid despite the weather. The jewelry market in China is booming and western SMEs have strong interest in investing in. The Chinese consumers are looking more and more at new trends in the jewelry industry.

Jewelry market in China :How to properly wear the jewelry in China

For starters, it would still be important to remember for people who often tend to confuse the china jewelry are types of jewelry that stand out slightly from the usual, as much in style as in form. This is made of the types of jewelry that were manufactured in more or less unusual dimensions, that is to say, quite large. It is therefore important to know if only notions on information about him. In other words, we must know what and when to put this type of costume jewelry. Indeed, the sector of the jewelry is highly developed today, which implies a definite choice to avoid doing wrongly and through any jewel. Circular shaped costume jewelry for example is not very suitable for people who have a round face shape rather. Similarly for costume jewelry diamond-shaped, which are not made to be worn by people with the extended face? By cons if we talk about the colors of the costume jewelry, the most important is just to remember to ensure that the color of the jewelry is consistent with the second dominant color of your clothes. At worst with dull and basic clothing color like black or white, costume jewelry in gold or silver are ideal. In short we can therefore see that the jewelry are accessories that should not be chosen lightly given the importance of their roles in daily life.

The different styles in the Jewelry market in China developed by SMEs

The majority of people think that jewelry is only complementary to perfect the look of a person. Other people also think that costume jewelry is reserved only for women. It must still recognize that costume jewelry were created in the image of women. This does not stop as long as men can have their model. First, we must remember the need to take into account some important details to be sure to choose the right jewelry that suits both your body and your style of dress. There eg. jewelry into geometric shapes such as circular jewels, diamond, square, triangle or event trapezoidal. These forms are probably the most common. However there are also other models like trends in flower shapes for discrete style lovers, skull jewelry for rockers. Not necessarily designed with a specific shape, large bracelets in gold or silver may well be suitable for stylish men.

 

See also:

http://daxueconsulting.com/second-hand-luxury-market-in-china/

http://www.harpersbazaar.com/fashion/trends/g989/jewelry-guide-0210/

http://www.thechicfashionista.com/fashion-costume-jewelry-2.html