China Tax/Business News Flash

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May 2015, Issue 21

Local incentives are allowed to be continued until expiry


At the end of 2014, the State Council released Notice Issued by the State Council Regarding the Clean-up and Standardization of Preferential Policies (Circular Guofa[2014]No.62, hereinafter referred to as the “Circular 62”), urging local authorities and government departments to clean-up the local preferential policies. The issuance of the Circular aroused wide concern and even worry from the public and it also create suspense for enterprises which are enjoying such local incentives. On one hand, the local authorities and government departments may have different interpretations of Circular 62 on how to deal with the local preferential policies already enjoyed by the enterprises, etc. On the other hand, a treatment of abolishing all these improper local incentives right away may have great impact on those enterprises.

On 10 May 2015, the State Council issued Guofa [2015] No.25 (hereinafter referred to as the “Circular 25”) providing its view on how to deal with these local preferential policies after the issuance of Circular 62, including treatment of preferential policies which have been promulgated by the local authorities and government departments or committed by contract, treatment of the local preferential policies currently enjoyed by enterprises, and treatment of new preferential policies to be formulated in the future. Circular 25 is a follow up of Circular 62, it provides a more practical implementation guideline based on the principle stated in Circular 62. In this News Flash, we will share with you the main content of Circular 25 and look at the impact on enterprises as well as issues that enterprises may face in the future.

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