2019 China tax policy review and 2020 outlook

March 2020

The China Tax Policy Review and Outlook is a series of annual publications designed by PwC’s China National Tax Policy Services to review key tax policy developments in China and discuss the trends including impacts on Chinese enterprises from a forward-looking perspective. This 2019 China Tax Policy Review and 2020 Outlook is the fifth issue in the series.

In 2019, China’s economy has kept sailing through waves and forging ahead. While the global economic slowdown, China-US trade tensions and other factors have exerted pressure on China’s economic growth. To boost the economic development and maintain stable growth, China continues to expand high-standard opening-up, propel innovation and reform, upgrade industries as well as optimise business environment in 2019. Meanwhile, China reduced taxes and fees on a larger scale, and actively pushed forward the process of legislation on taxation. As the era of BEPS2.0 is sneaking in to global reach, China, a major player in the digital economy, is likely to respond quickly and take timely action.

Some highlights from the 2019 China Tax Policy Review and 2020 Outlook:

  • The optimising tax environment, including further unleashing benefits from tax and fee cuts, and new breakthroughs in facilitating tax services;
  • Tax reforms, covering the steadily advancing IIT reform, the deepening VAT reform, and the accelerating all-round tax legislation;
  • Signs of a new opening-up, including the enforcement of the Foreign Investment Law and its implementation regulations, the minimising negative lists and expanding incentive catalogue;
  • Special economic development areas, covering the Greater Bay Area, the New Lingang area of China (Shanghai) Pilot Free Trade Zone as well as their supportive fiscal and tax policies;
  • BEPS, such as substantial activities requirement, new tax rules of the digital economy, and China renewing tax treaties, etc
  • Key words on the outlook for 2020 - speeding up tax legislation, advance tax ruling system of large enterprises, increasing super deduction ratio of R&D expenses, electronisation of special VAT invoices, implementation of the BEPS Multilateral Instrument in China, and new tax rules for digital economy.

Farewell to 2019 and embrace 2020. It is foreseeable that a number of tax laws are expected to be settled in 2020 with the acceleration of China's tax legislation. However, the pace of tax reform will not stop by then. Further progress of taxation policies, changes in collection and administration, and innovation of tax services are expected. At the beginning of 2020, the Coronavirus disease has swept across the country. In order to deal with the epidemic and support the economy, fiscal and tax authorities issued support policies to fight against the epidemic within a short period of time. China's fiscal and tax systems have made a quick response to emergencies. Facing the world, it is on the tiptoe of expectation that how China will participate in setting up the landscape of global tax governance against the backdrop of BEPS 2.0 to give play to China wisdom amongst new challenges.

 

Contact us

Peter Ng

Peter Ng

Asia Pacific and China Tax Leader, PwC China

Tel: +[86] (21) 2323 1828

Spencer Chong

Spencer Chong

China Tax Markets Leader, PwC China

Tel: +[86] (21) 2323 2580

Alan Yam

Alan Yam

China Central Tax Leader, PwC China

Tel: +[86] (21) 2323 2518

Charles Lee

Charles Lee

South China (incl. Hong Kong SAR) Tax Leader, PwC China

Tel: +[86] (755) 8261 8899

Edwin Wong

Edwin Wong

Lead Partner, Outbound Investment Service; China North Tax Leader, PwC China

Tel: +[86] (10) 6533 2100

Jeremy Ngai

Jeremy Ngai

China South Tax Leader, PwC Hong Kong

Tel: +[852] 2289 5616

James Clemence

James Clemence

Asia Pacific Global Mobility Services Leader, PwC Hong Kong

Tel: +[852] 2289 1818

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