1. Shanghai Customs Reform the Supervision and Administrative System of the Shanghai Free Trade Zone in Eleven (11) Respects

In response to AQSIQ’s (General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China) issuance of the Notice on Supporting Animals and Plants Inspection and Quarantine Reforms in the China (Shanghai) Pilot Free Trade Zone on March 4^th, Shanghai Customs has  launched a series of administrative system reforms in eleven (11) respects, introducing a negative list, entitlements to ‘post customs declaration’, ‘free freight transport,’  ‘unified customs declaration’ , a list of goods applied to simplified import filing procedures, etc. to the China (Shanghai) Pilot Free Trade Zone.

Subject to international conventions and current laws of the People’s Republic of China, the negative list was published by Shanghai Customs setting forth four (4) kinds of commodities that are prohibited from being imported or exported and fifty seven (57) kinds of commodities restricted under import and export supervision and controls to make sure commodities excluded from the list are circulated in a highly efficient and convenient way.

Since the Shanghai Free Trade Zone was launched at the end of January 2014, a total of 139 business transactions with an aggregate value of 204 million USD have been completed by companies in the zone. It takes only ten (10) minutes to complete an automatic application for taking delivery of goods through the customs information system. As a result, two to three days and a 10% average in logistical costs are saved to deliver goods from a destination port into the free trade zone.

 (Official website of the Shanghai Pilot Free Trade Zone Commission:

http://zbw.sh.gov.cn/WebViewPublic/item_page.aspx?newsid=635308316826305955&coltype=8 )

2. Shanghai Administration of Industry and Commerce Publishes the Enterprise Annual Report Announcement Rules (Provisional) of China (Shanghai) Pilot Free Trade Zone and the Business Status Records Management Rules (Provisional) of China (Shanghai) Pilot Free Trade Zone

Shanghai Administration of Industry and Commerce published the Enterprise Annual Report Announcement Rules (Provisional) of China (Shanghai) Pilot Free Trade Zone and the Business Status Records Management Rules (Provisional) of China (Shanghai) Pilot Free Trade Zone on March 3^rd, 2014.

Contents of the two Rules include the scope of application, undertakings, ways of announcement, etc. Subject to the Rules, one of the following companies shall submit annual audit reports prepared by qualified accounting firms.

1). Listed companies

2). Solely state owned companies and state owned holding companies

3). Those companies with registered capital of more than RMB 20 million

4). Those companies with annual sales (or operational) income of no less than RMB 20 million

5). Those companies engaging or dealing in finance, securities, futures, insurance, investment, assurance, capital verification, small loans, property development, real estate brokerage, education agency, vocational training (consultancy), immigration, labor dispatch, enterprise registration agencies, used materials purchase, explosives for civil uses, fireworks, building construction, etc.

The annual business inspection practices in Shanghai stopped this year.

 (Official website of the Government of Shanghai:

http://big5.shanghai.gov.cn/gate/big5/www.shanghai.gov.cn/shanghai/node2314/node2319/node12344/u26ai38447.html ）

3. “Negative List” Management Model Is Officially Launched in Huangpu District, Shanghai

Special Administrative Measures to Regulate Foreign Investors’ Entry into Core Service Markets in Huangpu District (1st Edition) was published on March 17^th, 2014 with the ‘negative list’ management model applied to all enterprises, including foreign invested ones, based in Huangpu District, being officially launched.

The above Special Measures are mainly applied to companies in the sector of modern services ranging from financial and other professional services to commercial trade, creative, shipping and logistic and tourism industries. According to the above Special Measures, consisting of 67 items, applicable companies are classified into nine (9) categories comprised of 22 classes, 87 sub-classes and 211 groups.

Authorities concerned about the Huangpu District took the initiative to start implementing the pilot simplified approval procedure in the commercial trade, consultancy and design service sectors. The ‘formality’ approval procedure greatly enhances efficiency of the foreign invested enterprise establishment approval process. The duration of the ‘fast-track’ approval process is just 4 business days, 80% shorter than that of the official approval process (which lasts 20 business days).

(Official Website of the Government of Huangpu District, Shanghai:

http://www.huangpuqu.sh.cn/shhp/zwdt/20140317/035001001_330d6a58-6dae-4294-ae4e-d2a3e3e78fec.htm?infoid=330d6a58-6dae-4294-ae4e-d2a3e3e78fec&categoryNum=035001001 ）

4. The State Administration of Taxation Publishes new Policies on Export Tax Rebates and Exemptions for General Service Providers in the Foreign Trade Sector

On February 27^th, 2014 the State Administration of Taxation promulgated new Policies on Export Tax Rebates (or Exemption) for General Service Providers in the Foreign Trade Sector to encourage such providers to export services. The Policies took effect as of 1^st April 2014.

According to the Policies, a general service provider in the foreign sector is entitled to enjoy tax rebates (or exemption) policies for self-support exports if it meets the following conditions:

1). The service provider exports self-produced goods

2). Goods exported have been sold by the manufacturer to the service provider

3). The manufacturer of the exported goods and an overseas importer (either an organization or an individual) enter into an export agreement stipulating that the service provider is responsible for exporting the goods to an overseas destination and collecting export fees payable by the importer

4). The service provider exports the goods independently.

 (Official Website of the State Administration of Taxation:

http://www.chinatax.gov.cn/n2226/n2271/n2272/c670348/content.html ）

5. The Supreme People’s Court publishes the Interpretation on Provisions Applicable to Finance Lease Contract Disputes

The Supreme People’s Court published the Interpretation on Provisions Governing Finance Lease Contract Disputes on February 27^th, 2014. The Interpretation took effect as of March 1^st, 2014.

The Interpretation which contained 26 articles was published in order to ensure the security of businesses subject to finance lease contracts by liberalizing conditions for the validity of finance lease contracts, tightening restrictions on termination of such contracts, etc.

In addition, the Interpretations stipulate matters relating to finance lease contracts, including recognition, enforceability, performance, dissolution, breach of such contracts, announcement of leased objects, plaintiffs and defendants to relevant lawsuits, limitation of actions, etc.

 (Website of Courts in China:

http://www.chinacourt.org/article/detail/2014/02/id/1221022.shtml359580331 )

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