China Tax/Business News Flash

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Aug 2013, Issue 23

A new page for the foreign exchange administration for service trade

Recently China’s State Administration of Foreign Exchange (SAFE) issued Circular Huifa [2013] No.30, titled Notice Releasing the Regulations Regarding Foreign Exchange Administration for Service Trade (hereinafter referred to as ‘Circular 30’ or the ‘Notice’). This long-awaited notice consolidates, abolishes and standardises the existing regulations on foreign exchange (forex) administration related to service trade. As such it streamlines the forex administration of service trade and makes it easier for investing in service trade. Circular 30 includes three important appendices, i.e., Guidance on Foreign Exchange Administration for Service Trade (hereinafter referred to as the ‘Guidance’), its detailed implementation rules (DIRs), and a list of abolished forex regulations. Circular 30, effective from 1 September 2013, simplifies the forex procedures under the service trade account for foreign-funded entities and outlines regulations that are comprehensive, systematic, clear and transparent.

The major changes brought by Circular 30 include decentralised authorisation, simplified verification procedures, relaxed regulation on forex income deposited outside China, reinforced administration on both forex in-flow and out-flow. The reform on forex administration under service trade reflects a shift in the mindset and methods of the forex administration system. The reformed forex administration strikes a balance between a simplified process for businesses and appropriate level of risk control for the SAFE.

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