CHINA Trends and Developments Contributed by: Ying Ding, Shihui Partners
Advance tax rulings In December 2023, the Shanghai Municipal Tax Bureau issued trial measures on advance tax rulings. In October 2025, it released formalised measures on the advance tax ruling system. Under the ruling system, taxpayers may obtain a writ - ten opinion from the competent tax authority on the application of tax laws and regulations to specific and complex tax issues. A ruling may be issued with respect to a particular transaction before it is con - summated, or after it is consummated but before the required tax return (due within three months or a longer period) is filed. In addition to Shanghai, the tax authorities in other regions such as Beijing, Shenzhen and Chongqing have also introduced (trial) measures on advance tax rulings. Notably, the advance tax ruling system does not cover advance pricing agreements (APAs) for related-party transactions. China implemented a simplified applica - tion procedure for unilateral APAs in 2021. Tax crimes Taxpayers and withholding agents may face criminal charges for tax evasion, tax fraud, false issuance of VAT invoices, or other unlawful acts. In March 2024, the Supreme People’s Court and the Supreme People’s Procuratorate jointly issued a judi - cial interpretation clarifying the criteria for adjudicat - ing criminal tax cases. The two bodies also regularly publish guiding precedents to secure consistency in judicial decision-making.
Other Key Issues The Hainan Free Trade Port
On 18 December 2025, the Hainan Free Trade Port (Hainan FTP) officially commenced its island-wide special customs operations. The entire Hainan FTP island has become a special customs supervision zone, applying an expanded “zero-tariff” policy for imported goods. In addition, the Hainan FTP applies a reduced CIT rate of 15% (compared to the standard 25% rate) for eligi - ble entities registered and operating in the Hainan FTP. The top IIT rate for wages and other eligible income is also 15%. Going forward, the Hainan FTP’s tax system is expect - ed to undergo a further round of reforms. Pillar Two To date, China has not announced any legislative pro - cess regarding the OECD Global Anti-Base Erosion Model Rules (Pillar Two).
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