Now! China - Enhancing Corporate Value – CFO Support Services [Issue No.38]

In today’s challenging economic landscape, businesses are actively adopting strategies to boost efficiency. Organisations are not only optimising workforce structures and restructuring teams, but they are also increasing investments in technology, leveraging automation and embracing digitisation to improve operational efficiency.

As part of this transformation, many companies are turning to CFO support services for tailored solutions that simplify processes, reduce operational costs and lay the foundation for sustainable future growth. These services enable companies to adapt to market changes and strengthen their competitiveness in an uncertain economy.

What does CFO support entail?

Our CFO Support services provide a one-stop solution, ranging from initial market assessment to operational implementation. Our business advisory experts offer strategic guidance and practical support tailored to each company's specific context, helping them make informed decisions and respond effectively to economic challenges. Additionally, we assist companies in strengthening their internal financial stability, identifying their accurate market position and laying a solid foundation for sustainable growth.

How does CFO support help?

CFO advisory services help assess a company’s overall financial health and identify the most effective strategies for enhancing performance. A key focus area is evaluating workforce structures and eliminating inefficiencies. During this review, companies may restructure teams and consider upskilling employees through targeted training programs. This approach not only refines existing talent but also allows for a strategic redeployment of personnel into roles where their skills can be better leveraged, maximising organisational effectiveness.

In addition to optimising workforce structure, the adoption of advanced technology is vital for improving operational efficiency. Integrating technological solutions into Standard Operating Procedures (SOPs) can significantly streamline business processes. By implementing automation tools and enhancing communication systems, businesses can reduce manual errors and boost productivity. CFO support services can guide the evaluation and selection of technologies that align with a companies’ goals, fostering innovation and empowering employees with the tools to work smarter. Ultimately, this drives greater efficiency and positions businesses for long-term success.

CFO support is a powerful enabler for companies to expand and optimise operations, helping them navigate the uncertainties and risks of the current economic environment while establishing a strong foundation for future growth.

China Updates

Accounting and Taxation

• Announcement of the Customs Tariff Commission of the State Council on Tariff Adjustment Plan for 2025
  

Announcement [2024] No.12 of the Customs Tariff Commission of the State Council

In line with the directives from the 20th National Congress of the Communist Party of China (CPC) and the second and third plenary sessions of the 20th CPC Central Committee, China is adjusting its tariffs policies to bolster trade, support innovation, accelerate the development of a trade power and steadily promoting Chinese-style modernisation. This includes changes to the import tariff rates and items for certain commodities, effective 1 January 2025, in accordance with the Tariff Law of the People's Republic of China.

Key adjustments:

1. Most-favoured-nation tariff rates
   1.    Increases in tariffs for certain syrups and sugar-containing premixed powders (see Appendix 1), in line with China's commitments to the World Trade Organisation (WTO).
   2.    Most-favoured-nation tariff rates shall apply to imports from the Union of the Comoros.
2. Provisional tariff rates
   1.    Provisional import tariff rates shall be applied to 935 commodities (excluding those under tariff quotas).
   2.    Export tariffs will continue for 107 commodities, including ferrochrome, while provisional export tariff shall apply to 68 commodities.
3. Tariff quota rates
   1.    Import tariffs for eight categories of imported commodities, including wheat will continue to be subject to tariff quota management and remains unchanged.
   2.    Specific fertilisers (urea, compound fertilser and ammonium hydrogen phosphate) shall continue to be subject to a provisional tariff rate of 1% within the quota.
   3.    Provisional tariff rates will continue to apply to a certain quantity of cotton imported beyond quota, in the form of sliding duty.
4. Tariff items
   Adjustments will be made to certain tariff items and domestic sub-items (see Appendices 5 and 6), resulting in a total of 8,960 tariff items in 2025.
5. Conventional tariff rates
   1.    Conventional tariff rates shall apply to certain imports under 23 agreements and originating in 33 countries or regions, in accordance with the free trade agreements and preferential trade arrangements signed and entered into force by China with the relevant countries or regions. Firstly, tariffs shall be further reduced in accordance with the free trade agreements between China and New Zealand, Peru, Costa Rica, Switzerland, South Korea, Australia, Pakistan, Mauritius, Cambodia, Nicaragua, Ecuador and Serbia and the Regional Comprehensive Economic Partnership Agreement (RCEP). Secondly, the free trade agreements between China and the Association of Southeast Asian Nations (ASEAN), Chile, Singapore, Georgia and Iceland, the Early Harvest Arrangement for the free trade agreement between China and Honduras, the Closer Economic Partnership Arrangement (CEPA) between Mainland China and Hong Kong and Macao, the Cross-Straits Economic Cooperation Framework Agreement (ECFA), and the Asia-Pacific Trade Agreement shall continue to be implemented in accordance with the relevant provisions.
   2.    In accordance with the Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Maldives, the tariff rates for the first year of the Agreement will apply to certain imports originating from the Maldives.
6. Preferential tariff rates
   1.    China will continue to offer zero-tariff treatment to 100% of tariff lines and implement preferential tariff rates to 43 least developed countries with which it has established diplomatic relations. For commodities subject to tariff quotas, only the tariff rate within the quota will be reduced to zero, while the tariff rate beyond the quota will remain unchanged.
   2.    In accordance with the Asia-Pacific Trade Agreement and agreements on the exchange of notes between China and the relevant ASEAN member states, China will continue to implement preferential tariff rates on certain imports originating from Bangladesh, Laos, Cambodia and Myanmar.

The plan shall come into force on 1 January 2025.

• Announcement of the Ministry of Finance, the State Taxation Administration and the China Securities Regulatory Commission on Further Improving Individual Income Tax Collection and Administration Services for Transferring Restricted Shares of Listed Companies by IndividualsAnnouncement of the Customs Tariff Commission of the State Council on Tariff Adjustment Plan for 2025

To promote the construction of a national unified market and optimise the function and role of taxation, the State Administration of Taxation (SAT), the Ministry of Finance (MOF) and the China Securities Regulatory Commission (CSRC) jointly issued the announcement on ‘Further Improving Individual Income Tax (“IIT”) Collection and Administration Services for Transferring Restricted Shares of Listed Companies by Individuals’ on 27 December 2024.

Key points of the announcement are as follows:

• Individuals must file and pay IIT on income from transferring restricted shares of the listed company at the place where the listed company issues the restricted shares.
• For securities institutions to withhold IIT on income obtained from transferring restricted shares for individual shareholders who hold accounts with them, two methods are provided: 
  1.    Priority: Remote processing of withholding IIT via the Individual e-tax or customer terminal
  2.    Alternative: Filing at the tax authority in charge of the securities institution
• If an individual taxpayer needs to file or pay taxes independently, they can conduct the declaration or payment in the following ways:
  1. Priority: Remote file at Individual e-tax website
  2. Alternative: Filing at the competent tax authority where the listed company is located
• This announcement applies to the collection and administration of IIT on income from the transfer of initial shares of companies listed on the National Equities Exchange/ Quotations or the Beijing Stock Exchange by individuals.
• This announcement is effective as of 27 December 2024.

Human Resources

• China Introduces Flexible Retirement System with Early and Delayed Retirement Options, Effective 1 January 2025

To implement the Decision of the Standing Committee of the National People's Congress on the Gradual Extension of the Statutory Retirement Age, the Ministry of Human Resources and Social Security, the Organisation Department of the CPC Central Committee, and the Ministry of Finance have jointly issued the Notice on Interim Measures for the Implementation of the Flexible Retirement System. This policy will take effect on 1 January 2025.

Under the new system:

• Employees may voluntarily choose to retire early after meeting the minimum contribution period, provided that the retirement is no more than 3 years before the statutory retirement age.
• Employees may retire at the statutory at the statutory retirement age if they choose.
• Employees may delay retirement beyond the statutory retirement age through mutual agreement with their employer, and the postponement period shall not exceed 3 years beyond the statutory retirement age.

Corporate Governance

• On 20 December 2024, the State Administration for Market Regulation of the People’s Republic of China promulgated the Implementing Measures for the Administration of Company Registration to enforce the latest Company Law of the People's Republic of China and the Provisions of the State Council on Implementation of the Registered Capital Management System under the Company Law of the People's Republic of China. These measures will take effect on 10 February 2025.

The Measures aim to standardise company registration administration, enhance transaction security and optimise the business environment. They clarify the requirements for company registration management and detail the relevant provisions of the latest Company Law. Some key highlights include:

1. The capital contribution amount subscribed by all shareholders of a limited liability company shall be fully paid up by the shareholders within five years from the date of incorporation of the company, pursuant to the provisions of the company's articles of association.
2. Where a limited liability company increases its registered capital, the capital contribution for the additional capital subscribed by its shareholders shall be fully paid up pursuant to the provisions of the company's articles of association within five years from the date of change registration for the registered capital.
3. For a limited liability company registered and established before 30 June 2024, if the remaining term for subscribed capital contribution exceeds five years as of 1 July 2027, the company shall, before 30 June 2027, adjust the remaining term for subscribed capital contribution to five years or less and record the same in its articles of association.
4. Shareholders may make capital contributions in cash or in kind such as intellectual property, land use rights, equity, creditor's rights and other non-cash properties that can be valued and legally transferred.
5. Information such as the amount of capital contribution subscribed and paid up by the shareholders of a limited liability company, capital contribution method and date, and the number of shares subscribed by the promoters of a joint stock limited company shall be disclosed to the public through the National Enterprise Credit Information Publicity System within 20 working days from the date such information is generated.
6. A company's unified social credit code shall be unique. Upon cancellation or revocation of a company’s establishment registration pursuant to the law, the company registration authorities shall retain the company's unified social credit code.
7. The measures also clarify the responsibilities of intermediary agencies, requiring them to act with integrity, perform their duties in accordance with the law, and refrain from harming national interests, public interests, or the legitimate rights and interests of others in their company registration and filing activities.

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