Shang­hai in­creases its com­pet­i­tive edge

City’s FTZ speeds up tax ar­range­ments off­shore to be­come world-class port

China Daily (Hong Kong) - - BUSINESS - By REN XIAOJIN renx­i­ao­jin@chi­nadaily.com.cn

China (Shang­hai) Pi­lot Free Trade Zone (FTZ) is speed­ing up its ex­plo­ration of off­shore tax ar­range­ments and freeport ar­eas while im­prov­ing its fi­nan­cial func­tion to play a big­ger role in the Belt and Road Ini­tia­tive.

Shang­hai FTZ will fur­ther in­tro­duce off­shore tax ar­range­ments, turn two of its ex­ist­ing bonded ware­house ar­eas into freeports by 2020, and will en­hance its fi­nanc­ing ser­vice to help Chinese com­pa­nies en­ter other overseas mar­kets, ac­cord­ing to the lat­est re­form plan re­leased by the State Coun­cil in March.

“As Chinese com­pa­nies have been car­ry­ing out ‘go­ing global’ strat­egy in wider ar­eas, we have seen the de­mand for off­shore tax ar­range­ment in the Shang­hai FTZ,” Zhu Min, deputy di­rec­tor of Shang­hai Mu­nic­i­pal De­vel­op­ment and Re­form Com­mis­sion, said at a re­cent news con­fer­ence.

As stressed in the re­form plan, Shang­hai FTZ will con­sider a fa­vor­able tax pol­icy for the rev­enue gained overseas un­der the guide­line of in­ter­na­tional and do­mes­tic tax reg­u­la­tions.

Zhao Xiaolei, di­rec­tor of the school of eco­nom­ics of Shang­hai Univer­sity of Fi­nance and Eco­nom­ics, said off­shore tax ar­range­ment is nec­es­sary for trade and in­dus­try up­grad­ing and op­ti­miza­tion, and the re­lated re­searchers and gov­ern­ment are wast­ing no time to work out the de­tails of such ar­range­ment.

“From the re­search point of view, Shang­hai will im­ple­ment a 15 per­cent tax rate for off­shore ar­range­ment pol­icy,” Zhao said. “Even com­par­ing to the world, it is a quite low tax rate.”

The re­form plan also aims to turn two bonded ar­eas — the Yang­shan Free Trade Port Area and the Pudong Air­port Com­pre­hen­sive Free Trade Zone — into trans­par­ent, ef­fi­cient and con­ve­nient free trade ports of highest stan­dards in the world, com­pa­ra­ble to Sin­ga­pore, Dubai, and ma­jor ports in the United States.

Zhu said the fu­ture freeports will not sim­ply be an im­proved ver­sion of bonded ports. The aim will shift from fa­cil­i­tat­ing trade and in­vest­ment to fur­ther per­fect it.

Shang­hai FTZ is also im­prov­ing its fi­nan­cial func­tion to back the Belt and Road Ini­tia­tives. “Shang­hai FTZ has been fo­cus­ing on the strength­en­ing of its fi­nan­cial ser­vice func­tion for the Belt and Road Ini­tia­tive, for ex­am­ple, cross-bor­der ren­minbi set­tle­ment ser­vice,” Zhao said.

Zhao added the fu­ture fi­nan­cial ser­vice Shang­hai FTZ pro­vides will be a strong com­ple­ment to the ex­ist­ing Asia In­fra­struc­ture In­vest­ment Bank and Silk Road Fund in sup­port­ing the Chinese com­pa­nies to go global.

In 2016, com­pa­nies reg­is­tered in Shang­hai FTZ in­vested 108 projects in 25 economies in­volved in the ini­tia­tive, among which Chinese in­vest­ment to­tals $2.63 bil­lion, while 763 com­pa­nies from 50 economies in­volved in the Belt and Road Ini­tia­tive were set up in the FTZ, at­tract­ing $3.76 bil­lion for­eign in­vest­ment.

Echo­ing the na­tional call for Made in China 2025, Shang­hai FTZ will also lower the bar for for­eign com­pa­nies to en­ter sec­tors such as trans­porta­tion and med­i­cal equip­ment man­u­fac­tur­ing, ac­cord­ing to Zhao.

RE­FORM ... Shang­hai will im­ple­ment a 15 per­cent tax rate for off­shore ar­range­ment pol­icy.”

Zhao Xiaolei, di­rec­tor of the school of eco­nom­ics of Shang­hai Univer­sity of Fi­nance and Eco­nom­ics

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