Extended tax policies for expats well received, more concrete steps expected
China will remain a highly favored investment destination for European companies in the long run, given its latest policy measures to boost market confidence and its efforts to reinforce its position in the global industrial, innovation and capital chains, experts and business executives said on Tuesday.
They made the remarks after the European Union Chamber of Commerce in China said the country's four-year extension of favorable individual income tax policies for foreign nationals is "very positive news".
China has extended its preferential tax policies for foreign nationals working in the country till the end of 2027, according to the Ministry of Finance.
The extension means that certain expenses such as housing, children's education and language training will be exempt from taxation, the EU Chamber of Commerce in China said on Monday.
"Announced on the margins of the start of the new school year, it will be extremely welcome news for families that have made the decision either to come to or remain in China," the chamber said in a statement.
The EU chamber expressed the hope that further concrete steps will now be taken to implement related measures.
As outlined in the provisions, foreign individuals who meet the eligibility criteria can either opt for the special additional deduction on personal income tax or adhere to the earlier regulations, thereby accessing tax exemption benefits on housing subsidies, language learning fees, children's education expenses and other subsidies.
Bai Ming, deputy director of international market research at the Beijing-based Chinese Academy of International Trade and Economic Cooperation, said that this move will attract more overseas talent to come to and stay in China.
The move also sends a positive signal to multinational corporations that they can continue to ramp up investment in the massive and lucrative Chinese market, Bai said.
Zhao Ping, vice-dean of the Academy of China Council for the Promotion of International Trade, said that in addition to capitalizing on the country's technological progress, numerous foreign companies regard China as an entry point to the huge market in the Asia-Pacific region.
They perceive investment in China as an avenue to tap into the extensive network of supply chains and distribution channels within the country, Zhao said.
The State Council, China's Cabinet, issued a 24-point guideline in mid-August to attract more global capital. The central government's commitment to enhancing the environment for foreign investment encompasses six key areas, which include ensuring effective utilization of foreign investment, increasing fiscal and tax support, and upgrading the facilitating mechanism for foreign investment.
The number of newly established foreign-invested enterprises in China reached 28,406 in the first seven months of 2023, up 34 percent year-on-year, data from the Ministry of Commerce showed.
Ling Ji, vice-commerce minister and deputy China international trade representative, said on Monday that China is willing to expand its opening-up to global businesses. Ling made the remark while meeting with Volkswagen Group China Chairman and CEO Ralf Brandstatter in Beijing.
China is Volkswagen's largest single global market and a pivotal strategic marketplace.
The German group is encouraged by the recent measures introduced by the Chinese government to optimize the environment for foreign investment, Brandstatter said.
This has instilled a sense of confidence in the future development of the Chinese market. Volkswagen remains committed to expanding its investments in China, intensifying research and development collaborations in fields such as electric mobility, digitization and autonomous driving, he added.
International Workplace Group, or IWG, a Swiss provider of hybrid working solutions, plans to deploy more resources to tap into the commercial property market by building more partnerships with domestic players across China in the coming years.
"Our goal is to expand our reach and cover a wider range of geographic areas, including not just first-tier cities and provincial capitals, but also lower-tier cities," said Edward Hu, managing director of IWG China.