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China has further eased foreign exchange control over capital account


12 February 2014
The Circular on Further Improving and Adjusting Foreign Exchange Control over Capital Account lately issued by PRC State Administration of Foreign Exchange (SAFE) has been implemented as from 10 February 2014.
The Circular further eased administration over advanced payment for overseas direct investment. For the advanced payment which is accumulatively within USD3 million and 15% of total investment of the Chinese party, the investor is only required to provide its business license and organization code certificate for the advanced payment registration with the local branch of SAFE, whereupon the investor may directly make remittance abroad through a bank.
The Circular also expand the scope of parties involved in loans provided by domestic enterprises to overseas borrowers. Now a domestic enterprise is allowed to lend to its overseas affiliate which has a direct or indirect shareholding relationship. Previously, a domestic enterprise was only allowed to lend to its wholly or partially invested overseas enterprises.
The Circular also simplified examination and approval procedures for profit remittance abroad. According to the Circular, if a profit remittance is USD50,000 or less, a bank will in principle make no examination and make the requested remittance directly, while for profit remittance exceeding USD50,000, the bank will in principle review only board resolutions for profit distribution and relevant tax filing form.
In addition to the above, the Circular also simplified the foreign exchange administration over several other aspects.

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Disclaimer
Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.

 

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