Guangdong Pilot Free Trade Zone (1): Official Launch and Overall Plan's
News Flash China Tax and Business Advisory
Guangdong Pilot Free Trade Zone (1): official launch and overall plan’s observations
April 2015 Issue 17
In brief
On 21 April 2015, China (Guangdong) Pilot Free Trade Zone (“Guangdong PFTZ”), along with China (Tianjin) Pilot Free Trade Zone (“Tianjin PFTZ”) and China (Fujian) Pilot Free Trade Zone (“Fujian PFTZ”) was officially launched. The day before the launch, the State Council released the overall plan of the three PFTZs 1 , the deepening reform plan of Shanghai PFTZ and the special administrative measures for foreign investments (2015 Negative list) 2 which is applicable to all the four PFTZs.
The overall plan and the deepening reform plan provide the basic framework on the strategic positioning, development objectives, primary mission and measures of the four PFTZs. The four PFTZs are on par in the degree of openness, whereas their development objectives are diverse. Looking at the overall plan of the Guangdong PFTZ, by leveraging on the successful experience of the Shanghai PFTZ, it has its own unique position in promoting the deeper cooperation between Guangdong and Hong Kong as well as Macao, becoming a key hub of the 21st-Century Maritime Silk Road and the pioneer in the new round of reform and opening-up.
In this issue of News Flash, we will share with you the basic information about the Guangdong PFTZ and highlights of the overall plan, analyse the investment opportunities under the 2015 Negative List and CEPA 3 and development trend of the Guangdong PFTZ.
In detail focus on shipping and logistics, Primary mission and special financial services, measures of the Basic information of the international trade, high-end Guangdong PFTZ Guangdong PFTZ manufacturing, etc.; Shenzhen Similar to the other three The Guangdong PFTZ covers Qianhai-Shekou Area will focus PFTZs in Mainland, the 116 square kilometres, on financial services, modern Guangdong PFTZ will also Comprising of three areas: logistics, information services, explore the reform of the Guangzhou Nansha New Area technology services and other innovative administration (including Guangzhou Nansha strategic emerging services; and mechanism by establishing the Bonded Port Zone), Shenzhen Zhuhai Hengqin New Area will "administrative authority and Qianhai-Shekou Area focus on travel, leisure & health, responsibility list" and further (including Shenzhen Qianhai business financial services, eliminating administrative Bay Bonded Port Zone) and culture & education, high-tech approval items. In addition, the Zhuhai Hengqin New Area. and other industries. In addition, all three areas have Guangdong PFTZ will also The overall plan provides a indicated that they will explore apply the "pre-establishment blueprint for the development new models for economic national treatment plus directions of the three areas of cooperation between Negative list" administrative Guangdong PFTZ respectively. Guangdong and Hong Kong as method to foreign investment. In terms of regional function, well as Macao in the financial Outbound investments by Nansha New Area will develop leasing, e-commerce, investors in the Guangdong all industry sectors international shipping sectors, PFTZ are subject to a record- comprehensively with special etc. filing method. The above measures are basically consistent in the four PFTZs.
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The primary tasks and measures of the under CEPA, Hong Kong investors are Area and Shenzhen Qianhai & Shekou Guangdong PFTZ which are allowed to build or rebuild cinema and Area are to be supervised under the distinguishable from the other three to operate movie projection business existing customs clearance approaches PFTZs is the further promotion of the in multiple locations through wholly with no new supervision model to liberalization of trade in services owned foreign companies in distinguish between first-line and between Guangdong and Hong Kong Mainland. Apart from the above second-line. In terms of innovative as well as Macao and the push to examples, CEPA has the competitive customs policies, the Guangdong deepen the opening-up of the financial advantages in relation to the degree of PFTZ allows the set-up of bonded sector in these three locations opening-up of the transportation, exhibition and trading platforms in innovatively. Through the platform information technology, securities, the special customs supervision area provided under CEPA, Guangdong professional services, culture & which supports the development of PFTZ can further explore the further recreation industries. pilot parallel importation of cars. It opening-up of trade in services also encourages the innovation Meanwhile, the degree of opening-up between Guangdong and Hong Kong development of cross-border financial of certain other industries is better as well as Macao, by further leasing business and supports bonded under the 2015 Negative List than eliminating or relaxing the entry delivery of goods under future barriers for Hong Kong or Macao CEPA. Investors from Hong Kong and contracts. Enterprises shall take their Macao should familiarise themselves investors in the following industries: business needs and these policies into the CEPA policies as well as the financial services, transportation and consideration in choosing the location development of the Negative List, shipping services, commercial for their business and enjoy the understand their discrepancies and services, professional services, convenience brought by the innovative respective advantages so that they technology services, etc. Moreover, customs measures. could enter the Mainland market by under the framework of CEPA, the using the optimal route. Guangdong PFTZ will also explore the Movement of personnel use of the "Negative list" Policy highlights in tax and Another highlight in the overall plan of administrative regime for the financial customs Guangdong PFTZ is the proposal to industry, promote cooperation and grant special support for Hong Kong, innovative services of Guangdong- In terms of tax policy, Guangdong Macao and overseas top talents to Hong Kong- Macao Renminbi PFTZ, Tianjin PFTZ and Fujian PFTZ facilitate their entries, exits and stay in business and explore innovation shall, in principle, follow those policies the Mainland and their project mechanisms for financial services which have been implemented on a applications. This policy together with under the liberalization of trade in trial basis in the Shanghai PFTZ. the IIT preferential policy provided by services. However, the overall plan of the Qianhai and Henqin must have a very Guangdong PFTZ particularly points Investment opportunities under positive impact in attracting talents out that the tax preferential and promoting innovation technology the 2015 Negative List and CEPA 4 treatments that are currently in the Guangdong PFTZ. applicable in Qianhai and Henqin are The 2015 Negative List consists of 15 still valid, but will not be extended to industry categories and 122 special The takeaway the rest of the Guangdong PFTZ. The administrative measures, which is one preferential tax policy is another Undertaking the respective roles, the category and 17 measures less than the four PFTZs are not only the important 2014 Negative List of Shanghai PFTZ highlight of the Guangdong PFTZ. Looking at the four PFTZs, only pivots of regional economy (2014 Negative List). Compared with qualified enterprises in the Qianhai development and an area to showcase the 2014 Negative List, the 2015 one Area, Henqin Area of the Guangdong new policies, but also the vital gateway further opens up the manufacturing, PFTZ and the Pingtan Area of the for Chinese enterprises and individual mining, wholesale & retail sales and Fujian PFTZ can enjoy a reduced “going abroad”. real estate industries; whereas it Corporate Income Tax (CIT) rate. In tightens the access to certain service The Guangdong PFTZ is adjacent to addition, the Individual income tax industries, for example: financial Hong Kong and Macao which makes it (IIT) preferential policy provided by services, professional services, distinct from the other three PFTZs. Qianhai to qualified overseas talents education, medical services, culture Hong Kong and Macao are thriving or much-needed overseas and recreation, etc. international financial centres and professionals and Hengqin to Hong also well developed in the service In view of the tightening up of the Kong and Macao residents industry as well as international access to certain service industries in respectively is also a unique highlight transportation. Linking the economic the 2015 Negative List, investments in in tax policy in Guangdong PFTZ. development advantages of the Mainland would be more flexible The Guangdong PFTZ adapts different Guangdong with Hong Kong and via CEPA. For example, under the customs clearance supervision models Macao to achieve co-prosperity is a 2015 Negative List, hospital is limited in different areas. The Guangzhou very good thought. to investment in the form of equity or Nansha Bonded Port Zone, Shenzhen cooperative joint venture; while under With respect to financial policies, the Qianhai Bay Bonded Port Zone and CEPA, Hong Kong investors are overall plan for Guangdong, Tianjin allowed to set up wholly owned Zhuhai Hengqin New Area which and Fujian PFTZs does not explicitly currently are customs special hospitals in designated cities in indicate the set-up of free trade supervision area, will be subject to the Mainland. Another example is that, accounts and separate account "first-line decontrolled, second-line under the 2015 Negative List, management system. Instead, the controlled" customs supervision investment in the construction and overall plan mention that it will model. Non customs special operation of a cinema has to be explore the carrying out of cross- supervision areas in the Nansha New controlled by Chinese party, while border investment and financing 2 PwC News Flash — China Tax and Business Advisory innovation through the way of free company’s business. Although the please refer to Guobanfa [2015] No. trade accounts and other risk- fundamental policies for the four 23, or the official link on the State controllable approaches. Hence, it is PFTZs are the same, there are Council’s website: still uncertain whether the free trade differences in the specific policies for http://www.gov.cn/zhengce/cont account system will be implemented in each PFTZ. After the release of the ent/2015- Guangdong, Tianjin and Fujian detailed rules and regulations by each 04/20/content_9627.htm PFTZs. of the PFTZ, we believe it will further 3. CEPA shall refer to
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Let’s talk
For a deeper discussion of how this issue might affect your business, please contact a member of PwC’s China Tax and Business Service for Guangdong PFTZ:
China South Tax Leader:
Charles Lee +86 (755) 8261 8899 +852 2289 8899 [email protected]
Qianhai: Henqin: Nansha:
Catherine Tsang Rebecca Wong Daisy Kwun +852 2289 5638 +86 (755) 8261 8267 +86 (20) 3819 2338 [email protected] [email protected] [email protected]
In the context of this News Flash, China, Mainland China or the PRC refers to the People’s Republic of China but excludes Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region. The information contained in this publication is for general guidance on matters of interest only and is not meant to be comprehensive. The application and impact of laws can vary widely based on the specific facts involved. Before taking any action, please ensure that you obtain advice specific to your circumstances from your usual PwC’s client service team or your other tax advisers. The materials contained in this publication were assembled on 29 April 2015 and were based on the law enforceable and information available at that time. This China Tax and Business News Flash is issued by the PwC’s National Tax Policy Services in China and Hong Kong, which comprises of a team of experienced professionals dedicated to monitoring, studying and analysing the existing and evolving policies in taxation and other business regulations in China, Hong Kong, Singapore and Taiwan. They support the PwC’s partners and staff in their provision of quality professional services to businesses and maintain thought-leadership by sharing knowledge with the relevant tax and other regulatory authorities, academies, business communities, professionals and other interested parties. For more information, please contact: Matthew Mui +86 (10) 6533 3028 [email protected] Please visit PwC’s websites at http://www.pwccn.com (China Home) or http://www.pwchk.com (Hong Kong Home) for practical insights and professional solutions to current and emerging business issues.
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