Q&A on Foreign Exchange Policies and Foreign Direct Investment
01
Q: In accordance with the Law of the People's Republic of China on Foreign Investment and the Rules for the Implementation of the Law of the People's Republic of China on Foreign Investment,government commercial departments will no longer issue the Certificate of Approval for Foreign-invested Enterprises (FIEs) or the Acknowledgement of Filing. What materials are required now for foreign exchange registration?
A: When making a foreign exchange registration,enterprises need to provide their bank with the company's business license,the notice of approval (except for certain cases where regulations specifically state the notice is not required),and the Application for Registration of Basic Information on Domestic Direct Investment. Unless otherwise stipulated,there is no need to submit a foreign direct investment (FDI) approval or filing documents issued by a commercial department.
Banks may refer to the Enterprise Credit Information Publicity System and the articles of association/partnership agreement submitted by the enterprise for verification,if the relevant information from the market regulators fails to meet the information requirement for foreign exchange registration.
02
Q: If a company is located in an area where tax filing has been made electronic,the original tax certificate issued by the local tax department obviously cannot be provided. When a foreign shareholder wants to transfer his equity in a company to a domestic institution,how should changes to the foreign exchange registration be made?
A: In order to facilitate filing procedures,tax filing certificates are no longer required when changing a foreign exchange registration to record the transfer of equity from a foreign holder to a domestic one,provided the transfer is made as a domestic direct investment.
In the remittance of the funds from an equity transfer,the bank may check the relevant electronic tax certificates through the online tax system of the local tax authority where tax filing has been made electronically.
03
Q: What are the procedures for the annual registration of equity stakes?
A: This registration has been incorporated into the annual reporting required by market regulatory authorities and the capital account information system will no longer be used for the submission of data. Foreign invested enterprises that were established and registered in China before December 31,2019 need to submit their annual reports through the National Enterprise Credit Information Publicity System (www.gsxt.gov.cn). This is in accordance with the Circular of the State Administration for Market Regulation,SAFE,and the Ministry of Commerce on the Integration of Multiple Annual Reports (SAMR Document No.238 [2019]) and the Announcement of the Ministry of Commerce,the State Administration for Market Regulation and SAFE on Carrying out the 2019 Annual Report of Foreign Investment Information Report (MOFCOM Announcement No. 37 [2019]). Submissions should be completed between January 1 and June 30,2020. Relevant data and information will be shared among authorities for commerce,market supervision and foreign exchange regulation.
04
Q: Since there are no physical copies of certificates or licenses,how are inward remittances and foreign exchange registration handled when payments of registered capital are required by foreign invested enterprises?
A: Some foreign invested enterprises,mainly financial institutions,can open an account for remittances that cover preliminary expenses. After receiving necessary approvals from regulators,companies need to register all newly established businesses,mergers and acquisitions,and capital increases by providing materials such as the approval documents and business license.
05
Q: Must the China branches of all foreign institutions make a foreign exchange registration?