The National Immigration Administration (NIA) of China announced that it would be releasing a new version of the foreign permanent resident (PR) ID card starting December 1, 2023.

 

Details of the New ID Card

The updated ID card will showcase a fresh design incorporating elements from China’s national flag, including new drawings of the Great Wall and shadings. The card will also feature more advanced anti-counterfeit technologies, ensuring a higher level of security.

 

The card number will expand from 15 to 18 digits, incorporating various information codes such as the foreigner identification code, nationality code, and application location code. Each cardholder will be assigned a unique number that remains unchanged throughout their lifetime.

 

Technological Advancements

 

The NIA has upgraded the card’s machine-readable and visual-readable fields, enhancing anti-counterfeiting features and optimizing the layout. The card will be easily identifiable through visual reading, facilitating more on-site application scenarios and online platforms.

 

Moreover, the card’s chip storage structure has been adjusted to be compatible with widely used identity card-reading machines across various sectors and departments.

 

Benefits of the New ID Card

 

Cardholders can use the PR ID Card as a valid certificate in situations such as accommodation registration and transportation ticket purchase, without the need to present their passports. Cardholders will have easier access to services such as education, health, transport, hotels, financial activities, and e-commerce.

 

NIA officer also explained that the card allows its holder to enter and exit the Chinese border multiple times, without the need for additional visa procedures, when presented along with a valid passport.

 

Existing cardholders can continue using their current cards within the effective period and apply for the new version at local exit-entry administration agencies as needed.

 

China initiated its permanent residency program for foreign nationals in 2004 with the goal of attracting international talent and fostering the nation’s socio-economic growth. While the initial stages of the program were characterized by stringent criteria, limiting the number of individuals who could secure permanent residency annually, there has been a notable shift in recent years.

 

The government has undertaken efforts to revise the permanent residency laws, aiming to expand the eligibility criteria for prospective applicants. This move is seen as a strategic approach to encourage a more diverse pool of skilled individuals from various fields to consider China as a viable place for long-term residence.

 

With the introduction of the new ID card, China is poised to elevate its openness and enhance the digitalization of services for foreign residents, promising improvements in both quality and efficiency.

 

Integra Group is a fully licensed asia-focused accounting, taxation, and business advisory firm – with dedicated offices in Shanghai, Beijing, Singapore and Taipei. We’ve helped companies ranging from Fortune 500 companies to small to medium sized businesses establish and grow their presence in Asia.

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The individual income tax benefits for foreigners, initially set to expire at the end of this year, will now continue until the end of 2027.

 

Foreign nationals who meet the criteria for tax residency in China (which refers to individuals who have domicile in China, or though without domicile but have resided for more than 183 days in total in China) now have a choice between two distinct tax advantages.

 

According to the updated guidelines, eligible individuals can either choose a special additional deduction for their personal income tax or follow the previously established regulations that provide tax-free benefits for housing allowances, language course fees, children’s education expenses, and other subsidies.

 

It’s crucial to note that these two benefits cannot be availed concurrently. Once an individual makes a selection, it remains unchangeable for the duration of that tax year.

 

This recent announcement confirms that this policy will remain in effect up to the end of December 2027, solidifying a long-term structure for the personal income tax strategy concerning subsidies for foreign nationals.

 

Recommendations for Companies

 

Companies employing foreign nationals should consider making HR and payroll policy adjustments in light of this extension. They should communicate with their employees to arrange benefits in line with the current policies. Companies that had made preparations for the original tax policy change might need to reconsider their decisions.

 

Extending the IIT preferential policy for foreigners showcases China’s strategic intent to attract and retain international talent. It also underscores China’s commitment to creating a favorable environment for foreign professionals and businesses.

 

Integra Group is a fully licensed asia-focused accounting, taxation, and business advisory firm – with dedicated offices in Shanghai, Beijing, Singapore and Taipei. We’ve helped companies ranging from Fortune 500 companies to small to medium sized businesses establish and grow their presence in Asia.

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Beginning May 15th, 2023, China will once again implement fast-lane services for a range of travelers entering and exiting the mainland, with the goal of accelerating border inspections and simplifying travel across regions. This initiative is anticipated to bolster the economy and fully restore the fast-lane services previously available prior to the pandemic.

Eligible travelers include Chinese citizens with passports or special permits for travel to Hong Kong, Macao, or Taiwan; Mainland tour groups planning to visit Hong Kong and Macao, as well as mainland visa applicants intending to visit relatives, work, study, or handle specific matters in the two regions, will also be permitted to apply for visas at any domestic exit and entry administration center.

Foreigners who possess valid passports and China-issued foreign permanent resident ID cards, as well as those who hold electronic passports and residence permits valid for over six months, can also access to the fast-lane services.

The National Immigration Administration issued a circular announcing the adjustments to immigration policies. These adjustments are expected to benefit people not employed where they have registered residence and will significantly ease the visa application process for tourists to Hong Kong and Macao. With more flexible immigration policies, tailored package products are expected to emerge, providing greater convenience for tourists.

Uplifting China’s Foreign Investment Prospects

The resumption of fast-lane services for cross-border travel is anticipated to boost foreign investment in China by simplifying border inspections and facilitating entry and exit for diverse travelers, thus creating a more inviting atmosphere for foreign investors and professionals.

With the further relaxation of border restrictions following the pandemic, cross-border movement is anticipated to be increased, which in turn will benefit the growth of international business activities and strengthen international collaboration in various sectors.

Integra Group is an Asia-focuses accounting, tax, HR, and market entry advisory firm servicing clients across our offices in Beijing, Shanghai, Taipei, Hong Kong, and Singapore. Contact us today and discuss how we can assist you in reaching your business objectives in China.

 

China has recently announced the resumption of visa issuance for foreigners of all categories, including visas for tourist and medical affairs. This marks a significant step towards reopening China’s borders to the world after almost two years of strict travel restrictions.

Changes to Chinese Visa Policies

According to the new policy adjustments, visas issued before March 28th, 2020, will be resumed for entry. Port visa authorities will also resume reviewing and issuing all kinds of port visas for legal reasons. Additionally, visa-free entry to Hainan province, Shanghai for cruises, Guangdong province for foreigners from Hong Kong and Macao, and Guilin, Guangxi for ASEAN tourist groups will be resumed.

China’s Full Reopening of Borders to Visitors

Business travelers have been eligible to apply for business visas for China since January 8th, when the country began its first major move towards reopening its previously busy borders by abolishing mandatory quarantine upon arrival. Since then, foreigners have been able to apply for business visas to travel to China for commercial activities. With the latest policy adjustment, however, foreigners can now travel to China more conveniently and for all purposes.

The resumption of visa issuance is expected to help revive the tourism sector and boost the country’s economy. It will also allow foreign businesses to restart their operations in China and provide a platform for international trade and invstment.

How to Obtain a Work Visa for China

Foreign nationals who wish to work in China are required to have a work visa, also known as a Z visa. Employers who are interested in hiring foreigners to work in China must comply with local laws and regulations, such as having a legal entity for their business in China and the appropriate certifications from local government entities. As China’s economy grows and attracts foreign investment, the demand for foreign talent is expected to increase, making work visas an essential tool for facilitating international business and cooperation.

To apply for a work visa in China, foreign nationals must first obtain a work permit, which the local Bureau of Human Resources and Social Security issues. Once the work permit is approved, the applicant can apply for a work visa at the Chinese embassy、consulate, or other diplomatic missions in person for application. The application process typically involves submitting a completed visa application form, a passport-sized photo, and other supporting documents.

It is important to note that China’s work visa regulations are subject to change, and applicants are advised to consult with the relevant authorities or seek professional advice before applying.

Let Us Help With Your Work Visa Application

Integra Group is a one-stop business service provider that offers assistance with work visas, business visas, and accompanying family visas. Our team of accountants and business advisors is highly experienced in handling government applications and ensuring that the work permit applications for entrepreneurs, business partners, and expatriate employees – and their families – are processed timely and without delay.

Contact us today to speak with one of our professionals and get started with your work visa application process.

On October 8th, 2022, the State Council issued a notice on the temporary adjustment to laws pertaining to foreign investment in outbound travel services in China. The amendments to the Regulations on Travel Agency allow qualified foreign-invested enterprises registered in Shanghai and Chongqing to provide travel services to Chinese nationals outside of China, including Hong Kong and Macao, but excluding Taiwan.

Article 23 of the Regulations on Travel Agency currently prohibits foreign-invested travel agencies nationwide from engaging in travel services for Chinese nations traveling abroad. The amendments direct the relevant local departments of the State Council in Shanghai and Chongqing to formulate the rules and relevant administrative measures in a manner comparable to a comprehensive pilot program allowing qualified foreign-invested enterprises in the area to engage in outbound travel services in China.

The amendment specifies the pilot program applies to qualified foreign-invested travel agencies without specifying the criteria which need to be met.  

Notably, the temporary adjustments come at a time when authorities have made considerable changes to the epidemic prevention and control policies pertaining to inbound travel to China in line with the dynamic zero-COVID policy which has sparked renewed optimism amongst Chinese tourists and travel agencies in China.

The temporary adjustments are effective until April 8th, 2024.

Opportunities for Outbound Travel Services in China

In the years leading up to the outbreak of Covid-19, outbound Chinese tourism had seen rapid growth reaching 155 million travelers in 2019. However, this number dropped significantly in 2020 to roughly 20.3 million and an estimated 25.6 million in 2021. This dramatic drop in outbound travel caused the once USD $255 billion industry to all but vanish for the time being.

Experts credit the significant drop in overseas travel in part due to the cancelation of many scheduled flights to and from China, driving air transportation prices up significantly, and the ongoing travel restrictions imposed on passengers entering China from abroad.

However, Chinese tourists have demonstrated an eagerness to resume travel abroad in the absence of strict travel restrictions. Following an announcement by Hong Kong SAR authorities on the new 0 + 3 policy for inbound passengers, referring to 0 days central quarantine and 3 days home quarantine, Trip.com reported a 400% increase in online booking compared to the weekend prior.

Likewise, when Macau reported no new local breakouts and dropped quarantine requirements for tourists from low-risk areas, the number of tourists to Macao recovered to 50 percent of pre-pandemic levels, indicating that quarantine requirements are a key factor in the resumption of international travel to and from China.

Notable Policy Changes for International Travel to China

China maintains a dynamic zero-COVID policy the goal of which, contrary to the name, does not aim to have zero infection, but instead controlling the spread of the virus at the lowest possible cost in the shortest possible time, according to Chinese officials. This includes making timely adjustments according to the changes in the virus and the situation on the ground.

In an October 12th announcement, the State Council stated that recent adjustments to epidemic prevention and control measures emphasize a scientific approach to minimize the impact of the epidemic on economic and social development goals. With domestic and international travel being a critical aspect of the zero-COVID policy, the announcement suggests that officials are looking for ways to minimize travel restrictions for both domestic and international travel.

Quarantine requirements

On November 11th, the National Health Commission announced a reduction in the quarantine requirements for travelers entering China from overseas. The quarantine requirement for travelers entering China has been reduced to “5 + 3”, which corresponds to 5 days of central quarantine and 3 days at home quarantine, down from “7 + 3”. The current quarantine requirements are a significant departure from policies earlier this year – which required a minimum of 14 days of central quarantine and up to 28 days in certain areas.

International Flight Routes

In the same announcement, officials also announced that they would be doing away with the “circuit breaker” policy which would temporarily suspend a specific flight route from operating based on the number of passengers who test positive for the coronavirus upon entry into China.  Flight routes could be canceled for up to two weeks if airlines failed to prevent the spread of infections onboard their flights.

Numerous reports in October also state that China’s three major airlines which include Air China, China Southern Airlines, and China Eastern Airlines will resume numerous international flights between high-profile destinations starting this year.

PCR Testing Requirements Prior to Entering China

Previously, all travelers planning to enter China must obtain a green Health Declaration Certificate (HDC) code for foreign nationals or a green Health Code for Chinese nationals from the Chinese embassy in the country of departure and transit countries. The previous policy required two negative PCR tests, the first of which must be sampled within 48 hours of departure and the second within 24 hours of departure.

Chinese embassies in numerous countries announced on November 11th that the PCR test requirements have been adjusted down to 1 test sampled within 48 hours of departure further reducing the cost and overall burden on inbound travelers to China.

Foreign nationals living in China have likely experienced the challenges of purchasing and sending foreign currencies abroad. Purchasing and sending foreign currencies typically requires foreign nationals to present a tax payment certificate, labor contract, and income certificate to the bank to carry out the process which can involve a visit to the local tax bureau and the involvement of their employer. However, the process of sending money abroad has recently become significantly more convenient for foreign nationals working in Shanghai.

The announcement of a pilot program in Shanghai for a “Fast Pass” to facilitate the purchase and remittance of foreign currencies came as welcomed news to many foreign nationals. The Fast Pass effectively replaces all the previous documents, allowing foreign nationals to just bring their Fast Pass and their Passport to purchase and send foreign currencies abroad.

The Fast Pass has successfully completed its pilot stage and can now be applied freely by qualified foreign nationals residing in Shanghai.

Who can apply for a “Fast Pass”

Currently, the Fast Pass is only available for foreign nationals employed by companies registered in Shanghai. Furthermore, the company should have a physical business premise and has not previously been found to have engaged in any illegal or untrustworthy conduct.

While the Fast Pass can be applied for in Shanghai immediately after the foreign national has paid tax on their income, the amount for remittance will be directly linked to the taxable income in the prior 12 calendar months. Thus, it is generally a good idea to apply once the foreign national has accumulated at least several months of taxable income or according to their personal requirements to avoid needing to apply again shortly thereafter.

Although the Fast Pass is currently only available in Shanghai, we hope to see the adoption of the Fast Pass in other cities in the future.

How to apply for a Fast Pass for foreign remittance in Shanghai

Applying for the Fast Pass is a relatively simple process and can be completed within a couple of days.

Online Application

To begin the application, the employer of the foreign national should navigate to the Fast Pass application portal of the Shanghai Online Government Services Platform（上海一网通办）and log in using their E-business license or their USB security token.

Then, enter the foreign national’s work permit number and begin the application. Once the application is opened, the system will auto-fill the personal information and tax information of the foreign national including the annual remuneration amount available to be remitted abroad. The company can report additional income received by the foreigner. However, it should be noted that this will require uploading additional supporting documents to demonstrate the additional income has been appropriately taxed.

Once all the information has been reviewed by the company, they can print the Fast Pass on Foreign Talents Remuneration Foreign Exchange form to be stamped using the company stamp and signed by the foreign national before being attached to the online application. Upon confirming all the information is correct, the application can be submitted.

There is no processing time for the online application and the foreign national or the company’s designated responsible person can proceed directly to the next step.

Visit the Foreign Talent Management office

The final step is for the company’s responsible person or the foreign national to make an appointment to visit the Foreign Talent Management Office in their respective area to have the form verified and stamped. To make an appointment, the foreign national or responsible person can book an appointment on the Shanghai Online Government Service Platform. Foreign nationals or the responsible person within the company need only bring the original Fast Pass on Foreign Talents Remuneration Foreign Exchange form affixed with the company stamp and the original work permit card of the foreign national.

With the Fast Pass form stamped by the Foreign Talent Management Office, the foreign national can now visit the bank to purchase and remit foreign currencies more freely. 

Note: The office authorized to verify and stamp applications can vary based on where your company is registered. The Shanghai Online Government Services Platform will identify which Foreign Talent Management Office jurisdiction the company belongs to.

List of Shanghai Foreign Talent Management Offices:

• 1525, Zhongshan West Road, Xuhui District, Shanghai Science & Technology Administrative Service Center
• 33 Shenhong Road, Minhang District, Hongqiao Business District Enterprise Service Center
• 38 Rijing Road, Pudong New Area, Shanghai Pilot Free Trade Zone Bonded Area Human Resources Service Center

 

How Does the Fast Pass work?

The Fast Pass is intended to facilitate the purchase and payment of foreign currencies for qualified foreign nationals by reducing the required paperwork foreign nationals need to present to the bank to carry out the process. Once successfully applied, the Fast Pass is valid for 2 years from the date of application and foreign nationals need only bring the original copy of the Fast Pass and their Passport with them to the bank to buy and remit foreign currency.

The Fast Pass allows foreign nationals to remit up to 100% of the annual remuneration amount as recorded on the Fast Pass. This, by default, is the after-tax income automatically reported by the Shanghai Tax authorities during the online application stage plus any amount carried forward.

This means that if the foreign national has worked outside of Shanghai and paid income tax outside of Shanghai within the last 12 months, this will likely not be included in the remuneration amount recorded on the Fast Pass.

The bank will record the amount of foreign currency remitted on the back of the Fast Pass each time a remittance is made. If all 20 spaces (columns) are filled or the foreign national does not remit the full amount available to them, the unused remuneration amount can be carried forward to the next application.

Integra Group Remarks

Prior to the use of the Fast Pass, the State Administration for Foreign Exchange (SAFE) relied on banks to verify that individual funds being used for foreign exchange by foreign nationals in China had been appropriately taxed in China and national foreign currency controls were being complied with.  With the Fast Pass in effect, authorities can now pre-approve the allowed amount for foreign remittance reducing the reliance on the bank to ensure compliance and allowing for a more streamlined process. 

While the Fast Pass does not fundamentally change China’s foreign currency controls, it does provide foreign nationals in Shanghai a significantly faster and more convenient avenue for remitting their China-sourced income abroad.

Jessie Lin, Director for Accounting at Integra Group, adds “the introduction of the Fast Pass is a welcomed development for foreign talents in Shanghai. The unified tracking of foreign exchange records provided by the Fast Pass enables the process of sending individual’s funds overseas to be significantly streamlined. We hope that with the success of the Fast Pass in Shanghai, more cities begin to implement the policy to better serve foreign talents across China.” 

Following a March 21st announcement by the Ministry of Finance and State Taxation Administration, all qualified Micro and Small-Sized Enterprises (MSE) and enterprises engaged in manufacturing and other industries may claim a one-time refund of their Value-Added Tax (VAT) credits starting from the April and May 2022 tax filing periods (MoF, STA [2022] Announcement No. 14).

The new policy allows qualified businesses to refund their existing VAT credits previously incurred by the business on goods and services purchases. For many businesses, this refund helps improve their short-term cash-flow requirements.

This comes at a time when numerous areas in China are experiencing a new wave of COVID-19 cases forcing many retail stores, manufacturing facilities, and offices to temporarily shut down their operation leading some to face severe cash flow constraints.

This policy not only applies to businesses affected by recent lockdowns but also benefits those who are facing a cash shortage due to the general economic downturn. Qualified enterprises that have recently made or are planning to make large capital investments in the business should also take note of the new measures. Taxes paid in relation to capital equipment, for example, can be claimed back in advance as opposed to being used to offsetting output VAT on future sales.

Prior to the announcement, only qualified advanced manufacturing enterprises have been allowed to apply for a 100% refund of VAT credits. MSEs in China have been able to apply for a 60% refund of VAT credits using the “refund-upon-collection” or “refund-after-collection” method. The updated policy allows MSEs and enterprises engaged in manufacturing and other industries to apply for a full VAT credit refund starting from the April and May 2022 tax filing periods.

 

 

Types of Refundable VAT Credits

 

Should businesses decide to apply for a refund, they can expect two separate refunds: 1) Existing VAT credits on or before April 1st, 2019; and 2) Incremental VAT credits incurred after March 31st, 2019.

The Existing VAT credits refer to the VAT credit amount in the current period, up to a maximum amount of VAT credit on the balance sheet as of March 31st, 2019.
If the VAT credit in the current period exceeds the VAT credits as of March 31st, 2019 (if any), the extra portion of the balance is referred to as the Incremental VAT credits.
If the company was established after March 31st, 2019, 100% of the VAT credit will be counted as the incremental VAT credit.

Example:

The company has RMB 1.2 million in input VAT credits as of April 30th, 2022. However, the company only had a VAT credit balance of RMB 500k as of March 31st, 2019. The amount of Existing VAT credit is RMB 500k while the Incremental VAT credit is RMB 700k.

 

 

How to qualify for the VAT credit refund

 

The newly announced measures are available to Micro and Small-Sized Enterprises which are classified as follows:

Micro-sized enterprises – include enterprises with value-added tax sales below RMB 1 million within 12 consecutive months prior to applying for the refund

Small-sized enterprises – include enterprises with value-added tax sales below RMB 20 million within 12 consecutive months prior to applying for the refund

Medium-sized enterprises – include enterprises with value-added tax sales below RMB 100 million within 12 consecutive months prior to applying for the refund

Large-sized enterprises – include enterprises with value-added tax sales of RMB 100 million or above million within 12 consecutive months prior to applying for the refund

 

In order to qualify for the VAT credit refund, MSEs and enterprises engaged in manufacturing and other industries must meet the following additional requirements:

• The taxpayer’s credit rating must be at A or B level;
• In the 36 months prior to the application for the tax refund, there is no incident of fraudulently obtaining tax refunds for remaining credits, fraudulently obtaining export tax refunds, or falsely issuing special VAT invoices;
• The company has not been penalized twice or more by the tax authority for tax evasion in the 36 months prior to the application for the tax refund;
• The company has not utilized the refund upon collection or refund after collection policy from April 1, 2019.

 

The announcement also expands the VAT refund policy for medium- and large-sized enterprises engaged in manufacturing and other industries. These specific industries refer to:

• Scientific research and technical services;
• Electricity, heat, gas, and water production and supply;
• Software and information technology services;
• Ecological protection and environmental governance; and
• Transportation, warehousing, and postal industries.

 

 

How to apply for the uncredited VAT refund

 

Businesses should first examine whether they have VAT credits on their balance sheet and whether the amount is enough to warrant the effort of seeking a refund. Taxpayers looking to apply the policy should do so through the online tax portal corresponding to the tax district to which the company belongs.
Qualified MSEs can apply for the Existing VAT credit and Incremental VAT credit according to the table below. Notably, the VAT refund for MSEs is scheduled to expire on December 31st, 2022.
Please change below the Uncredited VAT Refund to VAT Credit Refund.

Qualified enterprises can apply simultaneously for the Existing tax credit and the Incremental tax credit provided they are applying in the tax period corresponding to the table above or later.
Micro- and Small-Sized Business have until December 31st to apply for the VAT refund. However, there is no stated deadline for enterprises carrying out manufacturing and other industries to apply for the refund and it is expected that the policy will continue into 2023.

 

 

Limitations of the One-Time VAT credit refund

 

Ultimately, the tax refund does not reduce the total VAT liability of the business but instead provides more tools to better manage the cash flow by shifting the tax payment to the time of final sale.
This negates the businesses’ ability to credit the VAT credit against future output VAT on sales. In other words, the business will face a net higher VAT payable in the future due to having less input VAT to offset its output VAT.

However, the policy can be a useful tool for businesses to better manage their cash flow. Businesses facing closures or losses of revenue due to the recent economic downturn can apply the policy to receive cash back provided they meet the requirements. Likewise, businesses that made or are planning large capital expenditures can free up some working capital to run the business.

For more information on the application for the VAT refund, please contact us for a free consultation.