GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES

GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES
Peer Review Report Combined: Phase 1 + Phase 2, incorporating Phase 2 ratings

PEOPLES REPUBLIC OF CHINA
Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Peoples Republic of China 2013
COMBINED: PHASE 1 + PHASE 2, INCORPORATING PHASE 2 RATINGS
November 2013 (reflecting the legal and regulatory framework as at April 2012)
This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the OECD or of the governments of its member countries or those of the Global Forum on Transparency and Exchange of Information for Tax Purposes. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
Please cite this publication as: OECD (2013), Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: People's Republic of China 2013: Combined: Phase 1 + Phase 2, incorporating Phase 2 ratings, OECD Publishing. http://dx.doi.org/10.1787/9789264205567-en
ISBN 978-92-64-20555-0 (print) ISBN 978-92-64-20556-7 (PDF)
Series: Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews ISSN 2219-4681 (print) ISSN 2219-469X (online)
Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.
OECD 2013
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TABLE OF CONTENTS 3
Table of Contents
About the Global Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Information and methodology used for the peer review of China . . . . . . . . . . . . .11 Overview of China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Compliance with the Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 A. Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.1. Ownership and identity information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.2. Accounting records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.3. Banking information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 25 60 68
B. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 B.1. Competent Authoritys ability to obtain and provide information . . . . . . . . 74 B.2. Notification requirements and rights and safeguards. . . . . . . . . . . . . . . . . . 81 C. Exchanging Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.1. Exchange-of-information mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.2. Exchange-of-information mechanisms with all relevant partners . . . . . . . . C.3. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.4. Rights and safeguards of taxpayers and third parties. . . . . . . . . . . . . . . . . . C.5. Timeliness of responses to requests for information . . . . . . . . . . . . . . . . . . 83 85 92 94 96 97
PEER REVIEW REPORT COMBINED PHASE 1 AND PHASE 2 REPORT THE PEOPLES REPUBLIC OF CHINA OECD 2013
4 TABLE OF CONTENTS Summary of Determinations and Factors Underlying Recommendations. . . .103 Annex 1: Jurisdictions Response to the Review Report . . . . . . . . . . . . . . . . . 107 Annex 2: List of All Exchange-of-Information Mechanisms in Force . . . . . . 108 Annex 3: List of all Laws, Regulations and Other Relevant Material . . . . . . .113 Annex 4: People Interviewed During On-Site Visit . . . . . . . . . . . . . . . . . . . . . 120
ABOUT THE GLOBAL FORUM 5
About the Global Forum

The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 120 jurisdictions which participate in the Global Forum on an equal footing. The Global Forum is charged with in-depth monitoring and peer review of the implementation of the international standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention. The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. Fishing expeditions are not authorised but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard. All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of jurisdictions legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined Phase 1 plus Phase 2 reviews. The Global Forum has also put in place a process for supplementary reports to follow-up on recommendations, as well as for the ongoing monitoring of jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes. All review reports are published once approved by the Global Forum and they thus represent agreed Global Forum reports. For more information on the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and for copies of the published review reports, please refer to www.oecd.org/tax/transparency and www.eoi-tax.org.
EXECUTIVE SUMMARY 7
Executive Summary
1. This report 1 summarises the legal and regulatory framework for transparency and exchange of information in the Peoples Republic of China 2 (the terms PRC and China are interchangeably used) as well as the practical implementation of that framework. The international standard, which is set out in the Global Forums Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information, is concerned with the availability of relevant information within a jurisdiction, the competent authoritys ability to gain timely access to that information, and whether that information can be effectively exchanged with the jurisdictions exchange of information partners. China has transformed from a planned economy to a socialist market 2. economy. Since the introduction of market-based economic reforms in 1978 and the governments openness toward foreign direct investment, China has become the worlds second-largest economy. As a rapidly developing and industrialising global power, exchange of information for tax purposes, although relatively new to China, has been instrumental in Chinas tax compliance management. China fully endorses the international standards for transparency and exchange of information for tax purposes and has been an active member of the Global Forum on Transparency and Exchange of Information for Tax Purposes since its creation. 3. China has developed a comprehensive network of bilateral agreements that provide for exchange of information in tax matters. Currently, China has a network of 97 Double Taxation Conventions (DTCs), 95 of which are in force, and two agreements 3 in force containing provisions concerning
1. 2. 3. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The following territories were not included as part of this assessment: Hong Kong Special Administrative Region (Hong Kong SAR), Macau Special Administrative Region (Macau SAR) and Chinese Taipei. With Hong Kong Special Administrative Region (Hong Kong SAR) and Macau Special Administrative Region (Macau SAR).
8 EXECUTIVE SUMMARY
information exchange. In addition, China has entered into Tax Information Exchange Agreements (TIEAs) with eight jurisdictions (Argentina, The Bahamas, the British Virgin Islands, Bermuda, the Cayman Islands, Guernsey, the Isle of Man, and Jersey), seven of which are in force. Chinas agreements cover its major trading partners and China has not refused to enter into an exchange of information agreement with any Global Forum member seeking to do so. The large majority of Chinas agreements meet the international standards. China is also actively seeking to expand its exchange of information network and is currently engaged in negotiations to establish new agreements as well as renegotiations of its older agreements. 4. The main types of entities in China include limited liability companies, joint stock companies, and partnerships. Chinas system of multiple public registries, registers of shareholders maintained by public and private companies, and private registries maintained by Chinas tax authorities ensure that accurate and adequate current information concerning the ownership and control of legal entities and arrangements is readily accessible to Chinas competent authority. Chinas corporate and anti money laundering laws also ensures that bank information and accounting records are effectively maintained and accessible in a timely fashion. Additionally, there is a variety of penalties under Chinas laws to ensure that information required to be maintained is, in fact, maintained. Several of Chinas exchange of information partners who provided input regarding the review of China noted that over the past three years China has been able to provide ownership information and accounting records (including underlying documentation) for all types of legal entities and arrangements as well as bank information in response to specific requests for exchange of information. 5. Chinas tax authority (the State Administration of Taxation (SAT)) has broad powers to obtain bank, ownership, identity, and accounting information and have enforcement measures to compel the production of such information. The ability of the SAT to obtain information for exchange of information purposes is derived from general access powers under the Tax Collection and Administration Law and the SAT Protocol for International Exchange of Tax Information coupled with the authority provided under the relevant exchange of information agreements. The SAT authorities have rights to make enquires, inspect documents, and search and seize information when necessary. No bank secrecy or other provisions in Chinas laws and regulations unduly prevent the SAT authorities from obtaining, directly or indirectly, account information maintained by banks or other financial institutions for tax purposes. 6. Chinas competent authority (the Director of the Global Co-operation and Compliance Division of the International Taxation Department of the SAT (GCCD)), when requested by a foreign counterpart, can access information
EXECUTIVE SUMMARY 9
with the assistance of the SAT officials at or below provincial level, who have the necessary powers to access information from taxpayers and third parties in China. The co-ordination procedures between Chinas competent authority and the SAT are clearly defined and effective in practise. Over the past three years, the volume of specific requests for exchange 7. of information both to and from Chinas exchange of information partners has increased considerably. Chinas competent authority reports that it expects the number of inbound requests to continue to grow in future years. Understaffing at the GCCD may consequently result in longer response times, especially if large quantities of requests are received in a short time. It is therefore recommended that China devote additional personnel resources to the GCCD to ensure effective management of Chinas EOI program. 8. All of Chinas significant exchange of information partners, as well as most of its top trading partners, provided input to this review. The information received confirms that, notwithstanding some imperfections, Chinas practices with respect to exchange of information in tax matters are of a very high standard. 9. China has been assigned a rating 4 for each of the 10 essential elements as well as an overall rating. The ratings for the essential elements are based on the analysis in the text of the report, taking into account the Phase 1 determinations and any recommendations made in respect of Chinas legal and regulatory framework and the effectiveness of its exchange of information in practice. On this basis, China has been assigned a rating of Compliant for each essential element. In view of the ratings for each of the essential elements taken in their entirety, the overall rating for China is Compliant.
4.
This report reflects the legal and regulatory framework as at the date indicated on page 1 of this publication. Any material changes to the circumstances affecting the ratings may be included in Annex 1 to this report.
INTRODUCTION 11
Introduction
Information and methodology used for the peer review of China 5

10. The assessment of the legal and regulatory framework of the Peoples Republic of China (the terms PRC and China are interchangeably used) and the practical implementation and effectiveness of this framework was based on the international standards for transparency and exchange of information as described in the Global Forums Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information, and was prepared using the Global Forums Methodology for Peer Reviews and Non-Member Reviews. The assessment was based on the laws, regulations, and exchange of information mechanisms in force or effect as at April 2012, other information, explanations and materials supplied by China during the on-site visit that took place on 12-14 December 2011, and information supplied by partner jurisdictions. During the on-site visit, the assessment team met with officials and representatives of relevant Chinese government agencies, including the State Administration of Taxation, the Securities Regulatory Commission, the Banking Regulatory Commission, the State Administration for Industry and Commerce, the Ministry of Justice, and the Ministry of Finance (see Annex 4). 11. The Terms of Reference break down the standards of transparency and exchange of information into 10 essential elements and 31 enumerated aspects under three broad categories: (A) availability of information; (B) access to information; and (C) exchanging information. This review assesses Chinas legal and regulatory framework and the implementation and effectiveness of this framework against these elements and each of the enumerated aspects. In respect of each essential element a determination is made regarding Chinas legal and regulatory framework that either: (i) the element is in place, (ii) the element is in place but certain aspects of the legal
5. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
12 INTRODUCTION
implementation of the element need improvement, or (iii) the element is not in place. These determinations are accompanied by recommendations for improvement where relevant. In addition, to reflect the Phase 2 component, recommendations are made concerning Chinas practical application of each of the essential elements and a rating of either: (i) compliant, (ii) largely compliant, (iii) partially compliant, or (iv) non-compliant is assigned to each element. An overall rating is also assigned to reflect Chinas overall level of compliance with the standards. 12. The assessment was conducted by a team which consisted of two assessors and two representatives of the Global Forum Secretariat: Ms. Silke Vo of the Federal Ministry of Finance of Germany; Ms. Shauna Pittman of the Canada Revenue Agency; and Mr. Stewart Brant and Mr. Rmi Verneau from the Global Forum Secretariat. 13. The ratings assigned in this report were adopted by the Global Forum in November 2013 as part of a comparative exercise designed to ensure the consistency of the results. An expert team of assessors was selected to propose ratings for a representative subset of 50 jurisdictions. Consequently, the assessment teams that carried out the Phase 1 and Phase 2 reviews were not involved in the assignment of ratings. These ratings have been compared with the ratings assigned to other jurisdictions for each of the essential elements to ensure a consistent and comprehensive approach. The assignment of ratings was also conducted at a different time from those reviews, and the circumstances may have changed in the meantime. Readers should consult Annex 1 for information on changes that have occurred.
Overview of China
14. The PRC was founded on 1 October 1949 with Beijing as its capital. China is located in eastern Asia, bounded by the western shore of the Pacific Ocean. It has a land area of approximately 9.6 million square kilometres. Chinas territory is comprised of 34 provinces, autonomous regions, municipalities and special administrative regions. As at the end of 2010, China had a population of 1.3 billion. 6 The major cities are the capital Beijing, which is the political and cultural centre, and Shanghai, which is the largest industrial, commercial and financial centre. China is a multi-ethnic nation consisting of 56 ethnic groups. The official language is Chinese. All Chinese citizens over 18 years of age have the right to vote and stand for election (Constitution Art. 3). 15. China has transformed from a planned economy to a socialist market economy. It has become one of the worlds largest economies since the introduction of market-based economic reforms in 1978. Chinas gross domestic
6. 2010 Sixth National Population Census Data Gazette [1] (No. 1).
INTRODUCTION 13
product (GDP) was approximately 47.2 trillion Chinese Yuan Renminbi (CNY) (EUR 5.57 trillion) in 2011 (an increase of 9.2% from the preceding year). 7 Its economy is dominated by industry (46%) and services (44%); agriculture represents 10%. 8 Foreign direct investment in China reached approximately CNY 730 billion (EUR 86.1 billion) in 2011 (an increase of 9.7% from the preceding year). 9 Chinas major trading partners are (in order) the European Union; the United States; Japan; ASEAN 10 member states; Hong Kong China; the Republic of Korea; Chinese Taipei; Australia; Russia; and India. 11 Chinas currency is the Chinese Yuan Renminbi (CNY) (CNY 8.48 = EUR 1 as at 29 February 2012). 12 16. China is a member of the United Nations (Security Council), Group of Twenty Finance Ministers and Central Bank Governors (G20), Asia Pacific Economic Cooperation (APEC), Financial Action Task Force, the AsiaPacific Group on Money Laundering, and the Eurasian group on combating money laundering and financing of terrorism. China has been an active member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, its Steering Group and Peer Review Group.
General information on legal system and the taxation system

17. The Chinese state has a functional division among the legislative, executive and judicial bodies. The Constitution is the fundamental law of China. The existing Constitution was adopted by the National Peoples Congress (NPC) on 4 December 1982. 18. The NPC is Chinas legislative body (parliament) and the countrys highest authority of state power (Constitution Art. 57). The NPC elects all executive (administrative), judicial and prosecutorial departments of the state (Art. 3). It also has authority over the local peoples congresses which exist at all levels of local government. When the NPC is between sessions, the Standing Committee of the NPC (Standing Committee) executes the NPCs powers. Both the NPC and its Standing Committee exercise the power to
7. 8. 9. China Statistical Yearbook 2010. www.worldbank.org/. hhttp://english.mofcom.gov.cn/aarticle/statistic/foreigninvestment/201202/ 20120207948411.html. The top ten countries/jurisdictions investing in China in 2010 were: Hong Kong, China; Chinese Taipei; Japan; Singapore; United States; the Republic of Korea; United Kingdom; Germany; France; and the Netherlands. The Association of Southeast Asian Nations (ASEAN) has 10 member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. http://english.mofcom.gov.cn/aarticle/statistic/ie/200901/20090105999698.html. www.xe.com/.
10. 11. 12.
14 INTRODUCTION
enact national legislation (Art. 58). The NPC is empowered to amend Chinas Constitution and supervise its enforcement, and to enact and amend laws (e.g. the criminal law, civil law and law on state institutions) (Art. 62). The Standing Committee is empowered to interpret the Constitution and laws, supervise the Constitutions enforcement, and enact and amend laws other than those which should be enacted by the NPC. 19. Chinas executive body is the State Council (Constitution Art. 85). The State Council is led by the Premier, who leads the Ministers and Commissioners who are in charge of the various ministries and commissions. The State Council is empowered to formulate administrative legislation and regulations in accordance with the provisions of the Constitution and laws (Art. 89). Additionally, departmental regulations can be issued by the ministries and commissions of the State Council. The State Council is responsible to the NPC. 20. The judicial framework comprises two departments: the Peoples courts and the Peoples procuratorates (Constitution Art. 135). The Supreme Peoples courts and the Supreme Peoples procuratorates are directly responsible to the NPC and its Standing Committee (Art. 128). The national judicial departments are elected by the NPC, report to the NPC and are under the NPCs supervision. The Supreme Peoples Court (SPC) and the regional peoples courts are the state departments of adjudication, and independently determine on criminal, civil, administrative and state compensation cases. The Supreme Peoples Procuratorate (SPP) and the regional people procuratorates are the state departments of public prosecution and legal supervision. All of these courts and procuratorates can hear tax cases. The Ministry of Public Security (MPS) and the local public security departments are the state departments of criminal investigation. The Ministry of Public Security (MPS) is responsible to the State Council (Art. 89). 21. China adopts a civil law system. The Constitution of China has the highest legal authoritative power (Constitution Preamble). No laws, administrative regulations, or regional laws and regulations should conflict with the Constitution. The hierarchy of laws is as follows (in descending order): Constitution, laws, national administrative regulations, ministerial decrees and local regulations. Laws and local regulations are enacted by the NPC and by local Peoples Congresses, respectively. Ministerial decrees and local governmental rules are enacted by the ministries under the State Council and by the local executive authorities (Peoples governments), respectively. National administrative regulations may be referred to as rules, regulations or measures. 22. The NPC has the right to amend or revoke inappropriate laws made by the Standing Committee and to revoke specific regulations that are approved by the Standing Committee but which do not comply with the
INTRODUCTION 15
provisions of the Constitution and the Legislation Law (Constitution Art. 62). The Standing Committee has the right to revoke administrative regulations that conflict with the Constitution and laws. The State Council has the right to amend or revoke inappropriate departmental and local governmental regulations. 23. At various levels, the executive branches exercise administrative power in accordance with the Constitution and related laws. The State Council is in charge of formulating administrative regulations and has the power to make decisions on government administrative affairs that have national implications (Constitution Art. 89). Administrative regulations deal with administration by the executive. There are more than 40 departments which exercise specific administrative powers within their respective area under the State Council, such as industry and commerce, taxation, finance, customs, foreign exchange and banking sectors. 24. Tax treaties with foreign jurisdictions are concluded by the State Administration of Taxation but require the approval of the State Council. Treaties have the full force and effect of law in China and must be faithfully observed. From a tax perspective, international agreements, such as double taxation conventions (DTCs) and taxation information exchange agreements (TIEAs) override domestic laws but not the Constitution in the case of conflict (Tax Collection and Administration Law Art. 91).
The tax system

25. The administration of Chinas tax system is under the general jurisdiction of the State Administration of Taxation (SAT), consisting of local state taxation bureaus (LSTBs) and local taxation bureaus (LTBs) at the provincial level. The LSTBs, LTBs and their local branches at various levels are responsible for collecting and administering the taxes based on the substance of revenue allocation respectively (Tax Collection and Administration Law (Arts.5, 10). The chart below illustrates the organisation structure of the SAT.
16 INTRODUCTION
26. The current tax system in China has specific tax laws, rules, circulars and regulations for different types of taxes and all are binding from a tax perspective. State organisations that have the authority to formulate tax regulations within their administration include: The NPC and its Standing Committee, the State Council, the Ministry of Finance (MOF), the SAT, the Tariff and Classification Committee of the State Council, and the General Administration of Customs. 27. There are four tax laws in China: the Enterprise Income Tax Law (EITL), the Individual Income Tax Law (IITL), the Tax Collection and Administration Law (TCAL), and the Vehicle and Vessel Tax Law (VVTL). There are also several provisional regulations, including the Value Added Tax (VAT) Provisional Regulation, the Business Tax (BT) Provisional Regulation, and the Consumption Tax (CT) Provisional Regulation. In addition, there are circulars/rules and local regulations/rules to provide guidance, implementation details and clarifications on different tax issues as they evolve. 28. Chinas tax system consists of income, goods, and services taxes, as well as other taxes. Income taxes include enterprise income tax (EIT) and individual income tax (IIT). Goods and services taxes include VAT, BT, and CT. Local taxes include stamp duty (SD) and real estate tax (RET). 29. A PRC tax resident entity (i.e. an entity incorporated in China or an entity incorporated outside of China but with its place of effective management in China) is subject to EIT on its worldwide income at a statutory rate of 25% (unless specific preferential treatment applies) (EITL Arts.2, 3, 4). The EITL contains a foreign tax credit (FTC) mechanism for taxes paid on foreign
INTRODUCTION 17
income. 13 Non-resident taxpayers are generally subject to withholding tax on their China sourced income at a statutory tax rate of 20%, which is reduced to 10% by the State Council (or lower if a DTC rate applies) (EITL Arts.3, 4; the Implementation Rules of EITL Art. 91). Non-residents having a permanent establishment (PE) in China are subject to EIT of 25% to the extent of net taxable income attributable to such PE. The EITL also contains special rules, such as a general anti-avoidance rule and a number of specific anti-avoidance regimes, such as controlled foreign company rules and transfer pricing rules. 30. Chinese nationals who are domiciled in China are resident for tax purposes. Resident individual taxpayers are generally subject to the IITL on their worldwide income (special rules apply to expatriates). Non-tax resident individuals are subject to IIT in respect of their China-sourced income (IITL, Art. 1). Wages and salaries are taxed at progressive rates ranging from 3% to 45%. Business income is taxed at progressive rates ranging from 5% to 35%. Other income is taxed at 20%. 31. The TCAL and its Implementation Rules contain provisions for matters that are common and fundamental to tax collection in China. Articles dealing with procedural matters, such as the tax registration (Chapters II), tax audit (Chapters IV), and penalties and legal liabilities (Chapter V) make up the majority of the TCAL, but general provisions on maintaining accounting books, tax reporting requirements and collecting, and on other areas are also included. All taxpayers in China (including residents and non-residents, except 32. for government authorities and individuals) are required to register with the SAT under the Taxation Registration Administrative Rules (TRAR Art. 2). With a view to promoting and facilitating foreign direct investment, specific laws on different forms of Foreign Invested Enterprises (FIEs) were promulgated by the NPC. FIEs in China may take three major forms: equity joint ventures (EJVs), co-operative joint ventures (CJVs) and wholly foreignowned enterprises (WFOEs). These companies are purely Chinese resident companies and are consequently subject to the same taxation rules as apply to Chinese owned companies. In terms of foreign companies, there are various tax regulations which require a non-resident company to complete tax registration with the SAT as long as it has China sourced income (CITL Art. 2, TCAL Art. 2). China has various types of special economic zones in order to attract 33. foreign investment. The zones are classified as special economic zones, open coastal cities and economic and technology development zones, open coastal economic zones, high-and new-technology development zones, and free trade zones or bonded zones. Since 2008, most of the tax incentives granted
13. Circular Caishui [2009] No. 125 and Circular SAT Announcement [2010] No. 1.
18 INTRODUCTION
to these zones have been abolished. Certain non-tax incentives are available, which generally include more liberal regulations for foreign exchange control, labour management, land use, and provision of utilities. In terms of registration requirements or availability of information, companies located in these zones are subject to the same disclosure requirements as apply to companies established outside these zones.
International exchange of information for tax purposes

34. Chinas framework relevant to exchange of information for tax purposes is presided over by the SAT. Administration of the exchange of information under Chinas treaty network is the responsibility of Chinas competent authority, being the Director General, the Deputy Director General of the International Taxation Department, and the Director of the Global Co-operation and Compliance Division (GCCD) of the International Taxation Department. In practice, the GCCD is responsible for managing and responding to all of Chinas exchange of information requests. China has a comprehensive network of bilateral agreements that pro35. vide for exchange of information in tax matters, and is currently engaged in negotiations to establish new agreements as well as renegotiations of its older agreements. China signed its first DTC with Japan in 1983. Currently, China has a network of 97 DTCs, 95 of which are in force, and two agreements containing information exchange requirements. In addition, China has entered into eight TIEAs, with Argentina, The Bahamas, the British Virgin Islands, Bermuda, the Cayman Islands, Guernsey, the Isle of Man, and Jersey, seven of which are in force. 36. China also exchanges information through specific requests and on automatic and spontaneous basis on more than 10 000 cases a year. Further, with the aim of identifying and curbing international tax avoidance, China participates in the Joint International Tax Shelter Information Centre (JITSIC) along with Australia, Canada, France, Japan, the Republic of Korea, the United Kingdom and the United States.
Overview of the financial sector and relevant professions

37. Most financial activities are domestic and most of the key financial institutions are owned by the Chinese government, either fully or by a majority stake.
INTRODUCTION 19
Banking sector
38. The PBOC (Peoples Bank of China) was established in December 1948. In 1949, the central government of the PRC conferred on the PBOC the status of a national bank. It is the governments central bank and is entrusted with the independence and autonomy to make decisions regarding monetary policies. It reports its decisions to the State Council. 39. The CBRC (China Banking Regulatory Commission) took over the regulatory function of the banking sector from the PBOC in 2003. The CBRC is a ministerial-level organisation under the State Council. It is entrusted with regulation and supervision of banking institutions, asset management companies, trust companies and non-bank financial institutions. 40. The following table sets out the types of entities in Chinas banking sector. 14
Banking institutions (domestic and foreign) Commercial Banks Credit co-operatives and credit unions Non-bank institutions Financial asset management companies Trust companies Enterprise group financial companies Automobile finance companies Post savings Financial leasing companies Wholesale foreign exchange and CNY money brokers
City credit State owned co-operatives commercial banks Joint stock commercial Rural credit co-operatives and banks credit unions City commercial banks Rural commercial banks Rural co-operative banks Foreign-invested banks
41. As at the end of 2010, the total assets of the domestic banks was CNY 91 473 billion (EUR 10 787 billion) while the total assets of non-bank financial institutions was CNY 2 090 billion (EUR 246 billion). The total assets of the foreign banks was CNY 1 742 billion (EUR 205 billion). 15
14. There are also three policy banks founded and capitalised by the government: China Development Bank, China Import and Export Bank of China, and China Agricultural Development Bank. They participate in financing and business sectors or projects that are in-line with the state policies. Appendix 8-1 to 2010 Annual Report, China Banking Regulatory Commission.
15.
20 INTRODUCTION
Securities sector
42. The CSRC (China Securities Regulatory Commission) is a ministrylevel unit under the State Council authorised to regulate Chinas securities and futures markets. 16 Chinas securities sector is comprised of three main types of institutions: securities organisations, futures institutions, and fund institutions. Securities organisations are institutions that provide intermediary services to security market participants. The following table sets out the various types of securities institutions:
Securities institutions (domestic and foreign) Securities organisations Securities companies Stock and futures exchanges Securities registration and settlement institutions Futures institutions Futures companies Funds institutions Fund management companies Fund custody banks Fund sales agencies
43. There are currently two stock exchanges in China: the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Both are for listing of domestic companies (A shares for domestic investors only while B shares are permitted for foreign investments). As on 12 March 2012, there were 2 369 listed companies in domestic A shares; there were 108 listed companies in domestic B shares which have been permitted for foreign investment. Additionally, there were 170 companies listed in the Hong Kong, China Stock Exchange (overseas H shares).
Insurance sector
44. The CIRC is the government body authorised to regulate Chinas insurance sector. Chinas insurance sector includes four types of institutions, as set out in the following table:
Insurance institutions (domestic and foreign) Domestic-invested insurance companies and foreign-invested insurance companies Representative offices of foreign insurance institutions Insurance intermediaries Insurance asset management companies
16.
See further: www.csrc.gov.cn/pub/csrc_en/about/.
INTRODUCTION 21
Relevant professions
45. Accountants in China are generally only authorised to perform audit and related services (Law on Certified Public Accountants, Art. 15). As of December 2011, China had 97 510 registered certified public accountants and 7 976 registered public accounting firms. 46. As of October 2011, China had 200 000 licensed lawyers and more than 17 000 registered law firms. The Ministry of Justice is responsible for licensing and supervising lawyers. Lawyers are required to obtain a legal practice certificate issued by the provincial judicial administrative authority. Lawyers who intend to establish a law firm must submit an application to the provincial judicial administrative authority (Law on Lawyers, Arts.4, 15). The judicial departments examine lawyers and law firms annually for compliance with rules relating to legal practice, internal management and professional ethics. Lawyers are also supervised by the All China Lawyer Association (ACLA) which is the legal sectors national self-regulatory organisation. Lawyers are required to join their local lawyers association (Art. 36). 47. In China, notaries are required to operate on a non-profit basis. They may verify the legality, objectivity and authenticity of documents and transactions, hold funds in escrow, or handle funds on behalf of other persons or entities. As at June 2011, China had 3 182 notary offices, with 19 389 notaries. Establishment of a notary office is subject to the approval of the Ministry of Justice. Notaries who have passed the national judicial examination, satisfied the qualification stipulated by the Ministry of Justice, and served a full years internship and passed exam after receiving pre-service training may be licensed by the Ministry of Justice to perform notary services. 48. Authorised trust investment companies are the only businesses in China that are permitted to administer business trusts (Regulations on Trust Investment Corporations). No other financial institutions, lawyers, accountants or other professionals are permitted to engage in this activity as a business. Trust investment companies are treated as non-bank financial institutions and are covered by the Anti-Money Laundering Law (AMLL) and Anti Money Laundering Rules (AMLR) as described in part A of this report.
Recent developments
49. China signed a TIEA with the Cayman Islands and a new DTC with the United Kingdom in 2011. Chinas agreements with Argentina (TIEA), Bermuda (TIEA), the Czech Republic (DTC), Guernsey (TIEA), the Isle of Man (TIEA), Jersey (TIEA), Malta (DTC), Syria (DTC) and Zambia (DTC) entered into force in 2011.
COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 23
Compliance with the Standards
A. Availability of Information
Overview
50. Effective exchange of information requires the availability of reliable information. In particular, it requires information on the identity of owners and other stakeholders as well as information on the transactions carried out by entities and other organisational structures. Such information may be kept for tax, regulatory, commercial or other reasons. If such information is not kept or the information is not maintained for a reasonable period of time, a jurisdictions competent authority 17 may not be able to obtain and provide it when requested. This section of the report describes and assesses Chinas legal and regulatory framework for availability of information. It also assesses the implementation and effectiveness of this framework. 51. The main forms of business organisations in China include limited liability companies and joint stock companies. China relies primarily on business and tax registration, corporate record keeping requirements, and statutory tax filing requirements to ensure the maintenance of information on the legal ownership of companies. Companies are obliged to register with the relevant State Administration for Industry and Commerce (SAIC) and State Administration of Taxation (SAT) authorities before carrying on business
17. The term competent authority means the person or government authority designated by a jurisdiction as being competent to exchange information pursuant to a double tax convention or tax information exchange.
24 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

activities in China. Ownership information of companies, including foreign invested enterprises, is disclosed in the registration process. Joint stock companies are obliged to maintain up-to-date shareholder registries containing ownership information for all registered shareholders. China Securities Register and Settlement Institution and Securities Depository and Settlement Centres at local level maintain ownership information for unregistered shares in China. 52. Foreign companies conducting business in China are obliged to register with the SAIC authorities and are subject to the same tax filing requirements as domestic companies under the Enterprise Income Tax Law (EITL) as regards Chinese-source income. A foreign company is deemed a PRC-resident company for tax purposes if its place of effective management is in China. Under such circumstances, foreign companies are obliged to register ownership information with the responsible SAT authorities to the same extent as domestic companies. Information is available to Chinas competent authority that identifies 53. the partners in any partnership that has income, deductions or credits for tax purposes, carries on business in China, or is a limited partnership formed under PRC law. Such partnerships are obliged to register with the SAIC and SAT authorities before carrying out business in China. Ownership information of partnerships, including foreign invested partnerships, is disclosed in the registration process. 54. PRC law requires the maintenance of information that identifies the settlor, trustee, and beneficiaries of trusts. All trusts must be created in writing in the form of a trust deed and contain the names and addresses of the settlor, trustee and beneficiary. Trust deeds relating to business trusts are registered with the Shanghai Trust Registration Centre or the regulatory agency in charge of public affairs (for public welfare trusts). Trust companies are subject to stringent record-keeping requirements under the Anti-Money Laundering Law (AMLL), which requires the maintenance of ownership information on the settlors and beneficiaries. Resident trustees of foreign trusts are obliged to maintain ownership information on the settlor and beneficiaries for PRC tax purposes. 55. PRC law requires the maintenance of information that identifies the founders and members of the foundation council and beneficiaries of foundations established under its laws. Foundations in China are non-profit legal persons established for public welfare purposes. Foundations are obliged to register with the Ministry of Civil Affairs and the responsible SAT authorities before carrying out activities in China. Information that identifies the founders and members of the foundation council and beneficiaries is disclosed in the registration process.
56. Chinas general legal framework provides that relevant legal entities and arrangements carrying on business in China are obliged to maintain a full range of accounting records, including underlying documentation, for a minimum of five years. This is supplemented by specific legal rules applicable to each type of relevant entity and arrangement and makes accounting records available in China. Financial institutions operating in China are obliged to maintain information on all account-holders and related financial and transactional information. 57. The SAT reports to have few difficulties with respect to issues regarding the availability of ownership and identity information, both for domestic tax cases and for international assistance in tax matters. Additionally, there are a variety of penalties under Chinas laws to ensure that information required to be maintained is, in fact, maintained. The penalties appear to be effective and dissuasive enough to ensure compliance. Most of Chinas laws provide a range of penalties, including small to large monetary fines depending on the level of infraction, and imprisonment in egregious cases. 58. Information received from partner jurisdictions with an exchange of information relationship with China, as well as quantitative and qualitative information received from China, indicate that China actively exchanges bank, ownership, and identity information and accounting records. Based on peer input received, it is clear that Chinas competent authority has been able to provide such information for all types of legal entities and arrangements in response to specific requests for exchange of information.
A.1. Ownership and identity information

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities.
59. In China, a legal person is defined as an organisation that independently enjoys civil rights and assumes civil obligations in accordance with the law, from the time that it is established until it is terminated (General Principles of Civil Law of the PRC Art. 36). In addition to the term legal persons, Chinese nomenclature also uses the term unit. A unit is a much broader concept than a legal person. In general, a unit may refer to various organisations, such as companies, partnerships, trusts, foundations, official (state) organisations, social organisations, government-sponsored institutions, etc. To conduct business activities in China, a legal or natural person must register with the appropriate PRC authorities. 60. The SAIC is the government authority in charge of market supervision/regulation and related enforcement of commercial laws through

administrative means. One of the SAICs major responsibilities is to carry out and administer registration of enterprises (including foreign-invested enterprises), agricultural co-operatives, entities or individuals engaged in business operations and resident representative offices of foreign companies. It is also mandated to investigate and ban unlicensed business operations. All commercial entities in China must register with the SAIC and submit annual or tri-annual re-registration documents to the local SAIC office. Any changes in business scope or ownership structure must also be registered with the SAIC within a prescribed time, (e.g. 30 days from the time upon which the changes take place). The Foreign Enterprise Registration Bureau within the SAIC handles the regulation and registration of foreign representative offices and companies with foreign investment.
Companies (ToR 18 A.1.1) Types of companies

61. The Company Law of the PRC was enacted by the Standing Committee of the NPC in 1993 (last amended in 2005) with the aim of revitalising domestic enterprises by adopting a modern company structure. The Company Law provides the general rules for the formation and organisation of companies, including incorporation procedures, issuance of shares and bonds, responsibilities and functions of directors and management, finance and accounting rules, corporate restructuring, and dissolutions and liquidations. Companies in China are legal persons, which have independent legal personality and can hold property in their own name (Company Law Art. 3). 62. Companies can be categorised by the residency of their investors: domestic invested enterprises (DIEs) are companies with PRC resident investors only; and foreign invested enterprises (FIEs) are companies partly or wholly owned by foreign investors. FIEs can be jointly established by foreign companies (or enterprises, or other economic organisations or individuals) in co-operation with Chinese companies (or enterprises or other economic organisations) or established by foreign investors only (Regulations for the Implementation of the Law of the PRC on Joint Ventures Using Chinese and Foreign Investment Art. 16). 63. DIEs are only regulated by the Company Law. In addition to the Company Law, there are three basic laws on foreign investment that govern FIEs: Law on Sino-Foreign Equity Joint Ventures (LEJV ), Law on Chineseforeign Cooperative Joint Ventures (LCJV ), and Law on Wholly Foreign-Owned Enterprises (LWFOE). In case of divergence, the laws on foreign investment
18. Terms of Reference to Monitor and Review Progress Towards Transparency and Exchange of Information.
will prevail over the Company Law (Art. 18). The Taxation Registration Administrative Rules (TRAR), Administrative Rules for Company Registration (ARCR) and Accounting Law apply also equally to DIEs and FIEs established in accordance with PRC laws and regulations. Consequently, although there are specific rules that apply to FIEs, registration rules are the same for DIEs and FIEs (see below). 64. The Company Law provides for two types of DIEs: limited liability companies and companies limited by shares (joint stock companies) (Art. 2): joint stock companies can be public or private companies (Art. 78). Joint stock companies may be incorporated by any person or entity (except civil servants) by means of sponsorship or share offer (Company Law Art. 77). The capital of a joint stock company is divided into equal shares, and the shareholders are liable to the company to the extent of their respective shareholdings (Art. 126). Joint stock companies may have from 2 to 200 initial shareholders. Joint stock companies that issue shares to the general public must follow special rules issued by the securities regulatory institution of the State Council (Art. 129). As at the end of 2011, there were more than 205 000 joint stock companies registered in China; and any person or entity (except civil servants) may incorporate a limited liability company which cannot have more than 50 members. All members are liable for the companys debts to the extent of their respective capital contributions (Company Law Art. 3). As at the end of 2011, there were 9 500 000 limited liability companies registered in China.
65. Amongst FIEs, Equity Joint Ventures (EJVs) and Wholly ForeignOwned Enterprises (WFOEs) are companies with limited liability and legal personality. Cooperative Joint Ventures (CJVs) may or may not have legal personality, depending on the intention of the contracting parties as laid down in the CJV agreement. The ratio of distribution of income of a CJV may differ from the ratio of capital contributions of the contracting parties. The foreign party may have disproportionate superior rights to dividends until they have recovered the initial capital contribution. All CJV terms are based on negotiation by the parties. The ratio of capital in all three forms of FIEs is expressed in the percentage of interest of the investment, there are no shares issued to any parties unless the FIE is approved as foreign-invested joint stock company. 19 As at the end of 2011, there were 446 000 FIEs registered in China, among them approximately 52% were WFOEs, 40% EJVs and 8% CJVs. 66. From a tax perspective, companies are categorised as PRC-resident companies and non-resident companies. PRC-resident companies are those
19. By the end of 2011, there were 6 833 foreign-invested joint stock companies approved.

that are established in accordance with PRC laws and regulations, or those that are established under foreign law but whose place of effective management is located in China. Non-resident companies are those that are incorporated in foreign jurisdictions, not having a place of effective management in China, but with a permanent establishment in China, or deriving income from China without permanent establishments in China (EITL Art. 2).
Ownership information on domestic companies Business registration with the State Administration for Industry and Commerce (SAIC)
67. Companies incorporated under the Company Law (including both DIEs and FIEs) are obliged to register with the SAIC before carrying out business activities in China. A company is not considered formally established in China until it obtains SAIC approval in the form of a business registration certificate (business license). The Administrative Rules for Company Registration (ARCR) regulates the registration process. 68. Registration for limited liability companies (including FIEs) is completed by registering inter alia the following information with the SAIC (ARCR Art. 20): registration application form signed by the legal representative; companys articles of association; identification document of members (such as identity card or passport); identification document of the legal representative; name and address of the companys directors, supervisors and managers; and verification report of the companys registered capital.
69. Members of a limited liability company are obliged to sign the articles of association (Company Law Art. 25). The articles of association must include each members name, amount of the members contribution, the contribution method and the date of the contribution (Art. 25). The identity card of a PRC resident contains the persons permanent address. 70. Registration for joint stock companies is completed by registering inter alia the following information with the SAIC authorities (ARCR Art. 21): registration application form signed by the legal representative; companys articles of association;
identification document of initiators (such as identity card or passport); identification document of the legal representative; name and address of the companys directors, supervisors and managers; and verification report of the companys registered capital.
The articles of association for joint stock companies must specify the 71. initial shareholders names, amount of each shareholders contribution, the contribution method and the date of the contribution (Company Law Art. 82). 72. Limited liability companies and joint stock companies are obliged to complete alteration registration with the SAIC when there are any changes to the information they originally registered (ARCR Art. 26). Limited liability companies are obliged to complete alteration registration within 30 days of transfer of membership rights or change of members name or title (ARCR Art. 35). Joint stock companies are obliged to complete alteration registration and make a public announcement when they successfully complete a new share offer (Company Law Art. 137). In the event of a share transfer, both publicly-listed and private joint stock companies are obliged to register the shares transferred as well as identity information of buyers, including names, addresses, identity document numbers, with Chinas Securities Depositary and Settlement Centre (or local depositary centres) upon the share transfer (Measures for the Administration of Securities Registration and Settlement Arts.2, 29, see further developments under section A.1.2). This obligation applies irrespective of the number of shares transferred and is supported by effective sanctions (see below paragraph 111). The SAIC maintains registration information for an indefinite duration. 73. The SAIC reports that contents of the business registry are accurate and reliable because: it verifies whether registered documents are in the prescribed form and that their formulation is in accordance with PRC laws; those who fail to register or intentionally register false information are punished (ARCR Arts.68, 69); and registration applicants are obliged to submit documents necessary to investigate the contents of the application (ARCR Art. 2). The SAIC does not, however, routinely verify the accuracy of information contained in an application for registration, but will do so by verifying the identity of individuals concerned and the bona fides of the application where it has reason to believe that the company has not provided all the necessary information as required by law. In cases where the SAIC comes to know about a person who has failed to meet his/her registration obligations which subjects them to fines, the SAIC may directly impose such fines. 74. In practice, in 2011, the SAIC concluded 13 207 cases for registering false information with more than CNY 1.1 billion (EUR 119 million) in

fines collected and almost 310 000 cases for non-compliance with registration requirements with more than CNY 2.6 billion (EUR 308 million) in fines collected. These statistics cover all types of enterprises, i.e. companies and partnerships.
Ownership information kept by companies

75. Article 72 of the Company law provides that the stock rights of shareholders of a limited liability companies may be transferred among the shareholders and in the event that the rights are transferred to a non shareholder, this transfer requires the prior consent of a majority of the other shareholders. To this extent, notice of the transfer must be given and all shareholders have 30 days to consent or disagree. Considering this, shareholders in limited liability companies always have knowledge of the identity of the other shareholders. 76. In addition, limited liability companies are obliged to prepare and maintain a membership register that records: the name and address of each member; the capital contribution made by each member; and the serial number of the capital contribution certificate (Company Law Art. 33). Following the transfer of a membership interest, limited liability companies are obliged to record the name and address of the transferee in the membership register (Art. 74). The membership register must be maintained and be made available for inspection at the companys registered office (Art. 33). 77. Joint stock companies are also obliged to prepare and maintain a shareholder register that must be kept at the companys registered address (Company Law Art. 97). This requirement applies to both publicly-listed companies and unlisted companies. Upon issuance of registered shares, the shareholder register must record: the name and address of each shareholder, the number of shares held by each shareholder, the serial numbers of stock certificates held by each shareholder, and the date on which each shareholder acquires their shares (Art. 131). Following the transfer of registered shares, joint stock companies are obliged to record the name and address of the transferee in the shareholder register (Art. 140).
Tax registration with the State Administration of Taxation (SAT)

78. Upon obtaining a business license, both joint stock companies and limited liability companies are obliged to complete tax registration with the SAT within 30 days (Tax Collection and Administration Law (TCAL) Art. 15). Articles 13 and 14 of the TRAR (Administrative Rules for Tax Registration) provide that companies are obliged to register, inter alia, the following documents: business license, articles of association (containing the names of shareholders/members), organisation identity code certificate, legal
representatives identification card or passport, and tax registration application form. Those who fail to register are punished (TCAL Art. 60, TCALIR Art. 92). 79. Further, the SAT has reported that according to Article 17 of the TCAL, taxpayers engaged in production or business operations are obliged to submit their certificate of tax registration to banks or other financial institutions when opening accounts. Taxpayers are further obliged to report all of their bank or financial account numbers to the SAT authorities. Banks and other financial institutions must record tax registration numbers in the accounts opened by taxpayers and render assistance to the SAT authorities when they inquire about the accounts of taxpayers (Art. 17). 80. Companies are further obliged to disclose ownership information concerning their shareholders/members to the SAT in the tax registration application form, including their: name, nationality (for foreign shareholder/ member) or address (for Chinese shareholder/member), status (e.g. foreign company, Chinese company, natural person), business license number in cases where the shareholder/member is a legal entity, and identity card number if the shareholder/member is a natural person. The SAT is obliged to maintain tax registration information for 10 years (Regulations on Tax Collection and Records Management). 81. Companies are further obliged to notify the SAT of any changes to previously registered information, including changes to the companys ownership within 30 days of alteration registration with the SAIC (TCAL Art. 16; TRAR Arts.18, 19). 82. Article 29 of the TCALIR provides that companies are obliged to keep tax related information for at least 10 years, which includes the tax registration certificate and relevant tax registration documents. This general requirement applies to all types of companies (Art. 29).In practice, SAT registration authorities verify whether registered documents are in the prescribed form and that the information they contain is in accordance with PRC laws; those who fail to register or intentionally register false information are punished (TRCR Art. 44, TCAL Art. 60).
Foreign exchange registration with the Administration of Foreign Exchange

83. In addition to registration with the SAIC, FIEs are obliged to register with the relevant foreign exchange administrative authority (SAFE) within 30 days of obtaining their business license (Foreign Exchange Registration of FIEs Interim Measures Art. 4). During the foreign exchange registration, the company is obliged to disclose inter alia the following information to the SAFE or its local offices (via an application form along with a FIF Foreign

Exchange Information Registration Form) (Foreign Exchange Registration of FIEs Interim Measures Annex 1): name and nationality of the foreign investor; foreign investors registered address; and name and nationality of the ultimate shareholder 20.
84. Where there is any change in the items registered by a foreign enterprise, the foreign enterprise shall apply to the original Registration Authority within 30 days to change its registration (Art. 10 of the Measures).
Ownership information on foreign companies 21 Business registration with the SAIC

85. Foreign companies are obliged to register with the SAIC authorities before carrying out business activities in China (Administrative Measures for the Registration of Enterprises of Foreign Countries (Regions) Engaged in Production and Business Activities within the Territory of China Art. 2). Registration for foreign companies is completed by registering inter alia the following information with the SAIC (Arts.5, 6): company name and address; identification document of the responsible person of the project in China; and certificate of incorporation/business registration certificate issued by the government authorities of the foreign jurisdiction where the company is located.
86. The SAIC authorities are obliged to maintain registration information during the period a registered entity is in operation. After the entity is deregistered, the SAIC authorities are further obliged to maintain registration information before it is passed to the local archive centre for a permanent record (SAIC Corporate Registration Records Management Approach).
20. 21. Web link for a sample of the application form and the registration form (PDF attached separately): http://tianjin.pbc.gov.cn/publish/fzh_tianjin/2910/2011/20110830145733944892556/ 20110830145733944892556_.html. According to the Terms of Reference, where a company or body corporate incorporated in one jurisdiction has a sufficient nexus to another jurisdiction including being resident there for tax purposes (for example by reason of having its place of effective management or administration there), that other jurisdiction will also have the responsibility of ensuring that ownership information is available.
Tax registration with SAT

87. Article 2 of the EITL provides that a foreign company is deemed a PRC-resident company for tax purposes if its place of effective management is in China, even though it is not incorporated within China. Under such circumstance, foreign companies are obliged to fulfil their EIT obligations in line with the EITL and relevant rules (as applied to PRC-resident companies), including registering their annual returns and necessary supporting documentation. Ownership information is disclosed in the registration process to the same extent as for PRC-resident companies. Article 4 of the EITL Implementation Rules provides that place of effective management refers to an establishment that exercises, in substance, overall management and control over the production and business, personnel, accounting, properties, etc. of an enterprise. 88. A non-resident PRC company without a place of effective management in China is subject to PRC tax on China sourced income. To this extent, this foreign company must register with the tax authorities, file tax returns and pay taxes. Additionally, non-PRC resident companies engaged in contract engineering operations or providing labour or other services in China must apply for temporary tax registration with the responsible SAT authority where the project is located or the service is provided within 30 days from the date the contract is signed (The SAT Order [2009] No. 19 Art. 5). To complete the tax registration process, non-resident companies are obliged to disclose inter alia the following information to the responsible SAT authorities (via a tax registration form and an explanation letter (Art. 13): name of the foreign company; name and passport number of the foreign companys legal representative; name of the foreign companys shareholder(s); nationality of the foreign companys shareholder(s); shareholders status (e.g. foreign company, natural person); shareholders business license number or company registration number if the shareholder is a legal entity; and shareholders passport number if the shareholder is a natural person.
Ownership information held by service providers

89. China has several anti-money laundering laws and regulations which apply to financial institutions and certain non-financial institutions. These include the Anti-money Laundering Law (AMLL), Rules for Anti-money Laundering by Financial institutions (AMLRFI ), the Administrative Rules for the

Reporting of Large-Value and Suspicious Transactions by Financial Institutions, the Administrative Rules for the Reporting of Suspicious Transactions related to the Financing of Terrorism By Financial Institutions, and the Administrative Measures for Identifying the Financial Institutions Clients and Retaining Their Identity Information and Transaction Records (ARCIV ).
Financial institutions
90. All financial institutions in China are obliged to verify and maintain records of the identities of their clients (AMLL Arts.16, 19). Financial institutions are prohibited from providing services to any client whose identity is unclear. The term financial institutions refers to policy banks, commercial banks, credit cooperatives, saving institutions, trust and investment companies, securities firms, futures brokerage companies, and insurance companies (AMLL Art. 34). 91. Article 16 of the AMLL provides that when establishing business relationships with customers, or providing customers with one-time financial services including cash remittance, cash conversion and acceptance and payment of notes exceeding the specified amount, financial institutions must request the clients to present their real and valid identification certificates or other supporting documents for verification and registration purpose. Article 7 of the ARCIV provides that the threshold for verifying a customers identity for a one-off transaction at the financial institution is CNY 10 000 (EUR 1 179). Article 8 of ARCIV provides that where the customer withdraws an amount above CNY 50 000 (EUR 5 896), the financial institution is required to verify the customers identity and require the customer to present his/her identification document. According to the ARCIV, financial institutions are obliged to properly 92. preserve their clients identity information and their transaction records and ensure that every transaction can be adequately reproduced, so as to provide the necessary information for identifying their clients, monitoring and analysing the circumstances of their transactions, investigating suspicious transactional activities, and investigating and prosecuting money-laundering cases. Where the client is not a natural person (e.g. a legal person or other organisation), the records kept by financial institutions must contain the following information (ARCIV Art. 33): name; address; business scope; organisation identification code;
tax registration certificate number; business license (or other types of license which allows the entity to conduct operation) number; name and identification document of the clients actual controlling shareholders/members/beneficiaries; and name and identification document of the clients legal representative.
93. For each transaction conducted, financial institutions must keep such records as are reasonably necessary to enable the transaction to be readily reproduced (ARCIV Art. 3). Financial institutions are required to update the information they have on the client when there is any change. Client identity data must be kept for at least five years from the date the business relationship terminates and transaction records must be kept for at least five years from the date the transaction terminates. In case of bankruptcy and windingup, financial institutions are obliged to transfer their records to an agency designated by the relevant department of the State Council (AMLL Art. 19). In practice, companies incorporated in China typically have accounts 94. with financial institutions in China. This is because all companies are obliged to have registered capital upon incorporation. Article 10 of the Administrative Provisions on the Registration of the Registered Capital of Companies provides that the registered capital of a limited liability company cannot be less than CNY 30 000 (EUR 3 538), whereas the registered capital of a joint stock company cannot be less than CNY 5 million (EUR 589 623). In addition, the capital contribution of a companys registered capital must consist of no less than 30% cash. Article 12 of the Administrative Provisions on the Registration of the Registered Capital of Companies provides that the cash contribution must be deposited into a bank account opened by the company in full amount. 95. Further, the SAT reports that in practice taxpayers are obliged to open a bank account to pay their tax liabilities. According to Article 17 of the TCAL, a taxpayer engaged in production or business activities is required to submit all of its bank or other financial account numbers to tax authorities and banks and other financial institutions must register a clients tax ID upon the opening of an account. Those who fail to register are punished (TCAL, Art. 60, TCALIR, Art. 92). 96. Chinas Financial Intelligence Unit reports that financial institutions in China are aware of their obligations under the AMLL.
Non-financial institutions
97. The Anti Money Laundering Law does not contain any specific rules requiring designated non-financial businesses and professionals (e.g. lawyers, accountants, notaries) to have knowledge of their clients. 98. Lawyers and notaries in China are obliged to conduct limited customer due diligence on their clients. For clients who are legal persons, lawyers are required to determine whether the legal person is a legal establishment or legal existence, its current conditions, the scope of its business as confirmed in its business license and its actual major business scope. For customers who are natural persons, lawyers are required to determine their nationality, residence, vocation and other natural conditions (Work Rules on Legal Counsel for Lawyers Art. 11). Lawyers are required to keep a working diary of legal services provided (Work Rules on Legal Counsel for Lawyers Art. 21). Lawyers engaging in securities work are required to keep their working papers for 10 years (Administrative Rules on Lawyers Engaging in Securities Business Art. 17). However, the required content of these records is not specified. 99. When performing notarial acts, notaries are required to examine the identity of the person concerned (Notarisation Law Art. 28). No further customer identification, verification or due diligence requirements are specified. These legal requirements do not ensure accurate ownership information is kept by these professionals.
Ownership information held by nominees

100. Article 18 of the Administrative Measures for Securities Measures and Settlement provides that shares must be registered under the name of their real owner, unless otherwise specified by laws and regulations. Currently, China only permits nominal shareholding in the following limited situations under specific laws and regulations: qualified foreign institutional investors (QFIIs) are obliged to open securities accounts at Chinas securities registration organisation, and the accounts may be opened in the name of nominees. Nominee account holders are obliged to report to the CSRC and stock exchange at the end of each quarter on the name and address of the actual shareholder (Measures for the Administration of Securities Investment within the Territory of China by Qualified Foreign Institutional Investors Art. 16); and B shares (shares listed in the domestic China exchanges that provide restricted approval for foreign investors to trade) are also permitted to register the share under the name of the nominee shareholder.
Any change in the beneficial shareholder must be disclosed to the Securities Registration and Settlement Institution (SRSI). (Rules on Foreign Shares of Domestic Listed Companies Art. 22). 101. Furthermore, all nominees are required to know the ultimate individual owner of the shares and provide such information to the SRSI upon request (Administrative Measures for Securities Measures and Settlement Art. 18). In practice, the SAT is able to verify whether the legal shareholder and the nominee shareholder are the same person by checking the shareholders securities account information, IP address (if the share transaction is performed online), telephone number (if the share transfer request is made via telephone) and make inquires with the person/company under investigation or involved in the transaction. These requirements also apply to non-publicly listed securities (Art. 2). These legal requirements are supported by effective sanctions (see below paragraph 111). 102. There is no information from input received from Chinas peers showing that China has not been able to respond to an international exchange of information request as a result of information not being maintained by nominee shareholders.
Conclusion
103. Chinas legal framework ensures the availability of the following ownership information in relation to companies: limited liability companies must disclose the identity of their members upon registration with the SAIC. Any alteration to this information must be updated in the register maintained by this authority. The same rule applies to joint stock companies though only the identity of their initiators must be disclosed upon registration. all companies must keep a register of members where details of all shareholders and members are recorded. This information must under the law be kept updated; foreign companies must register with the SAIC, although no ownership information has to be disclosed for registration (but these companies are subject to comprehensive tax requirements, see below); all domestic companies must register with the SAT, provide upon registration the names of their shareholders/members and update this information within 30 days of alteration. The same obligations apply to foreign companies where they have their seat of effective management located in China. Foreign companies not having their seat of effective management in China must also apply for registration (or

temporary registration in certain case) with the SAT and disclose the identity of their members/shareholders upon registration; information in relation to nominees is available in China as nominees are required to know the name of the ultimate owners of the shares and provide such information to the SAT upon request.
Bearer shares (ToR A.1.2)

104. Almost all enterprises in China were wholly owned by the State until 1978 when the Chinese government introduced the Open Door Policy. In early 1980s, a small number of state owned companies started to convert themselves to joint stock companies and began to access the capital market by way of issuing shares. At the beginning, such trial shares were issued to employees only and employees were obliged to deposit their shares in authorised securities operation institutions. Share transfers were first permissible on 5 August 1986. The Shanghai Stock Exchange was set up in Shanghai in 1990. The Shenzhen Stock Exchange, the second stock exchange in China, was formally approved on 3 July 1991. With the setting up of the two exchanges, Chinas stock market began to take shape. 105. Any company that issues stock certificates in registered form shall prepare a shareholders register where all particulars in relation to holders of such shares must be recorded (s. 131). Since 1992 joint stock companies have been permitted to issue shares in bearer form (Company Law Art. 130). 22 Any joint stock company that issues stock certificates in unregistered form must record the amount, serial numbers and date of issue of the stock certificates (Art. 130). 106. While it is not possible to disclose the exact figures on bearer shares in this report, Chinas authorities have advised that the number of securities issued in bearer form is strictly limited.
Foreign investors
107. Specific rules apply to foreign investors. Foreign investors, who purchase qualified domestic company shares 23, are obliged to open foreign exchange accounts and specific foreign-invested security trading accounts in authorised institutions, i.e. a Securities Registration and Settlement Institution (see below) to purchase qualified domestic shares (Arts.25 and 27 Detailed Implementation Rules for the Order 18, Circular ZWF [1996] No. 9). Foreign
22. 23. As at the end of 2011, there were 205 000 joint stock companies registered in China. Qualified domestic company shares refers to B shares which are foreign shares listed in China domestically. See paragraph 40.
investors approved to purchase domestic shares must provide identity information and their qualification certificate for purchasing shares in the Chinese domestic market (Art. 4 Order 18). 108. Further, according to Article 22 of this Order, foreign shareholders who hold Chinese domestic shares must disclose all related transactions and beneficial ownership information to the PBOC (before 1992) or the CSRC (after 1992) making ownership information in relation to foreign investors available at all time in China. 109. In addition, once a single foreign investor directly or indirectly owns 5% or more of a companys total listed foreign-invested shares, he/she needs to report to the CSRC, the security market and the company about the investment purpose and related investment information (Art. 38 Detailed Implementation Rules for Order 18, Circular ZWF [1996] No. 9).
Registration of securities
110. Chinas Company Law provides that all transfers of shares by a shareholder shall be carried out via a lawfully established stock exchange or by any other means prescribed by the State Council (Art. 139). The State Council has prescribed that such transfers may also occur by way of local depository centres. 111. To trade securities, either listed or non-listed, registered or in bearer form, a shareholder must have a specific securitised trading account registered in a relevant Securities Registration and Settlement Institution (SRSI) or a local depository centre: for listed securities, an electronic system of securities was first introduced in 1991. By the end of 1992, both the Shanghai and Shenzhen stock exchanges adopted the system. This means that starting from 1992, in China; all listed shares have been electronically registered in the government sponsored registers. To better control the security market and maintain the ownership information, SRSIs were established in 2001. They took over all registration and clearing business previously handled by the Shanghai and Shenzhen Stock Exchanges; and for non listed securities, in 2001, the CSRC issued the rules to delegate the handling of non-listed securities registration to local depositary centres.
112. Rules for securities registration are currently governed by the Measures for the Administration of Securities Registration and Settlement (Order of the China Securities Regulatory Commission No. 65) (the Measures), introduced in 2006 and revised in 2009. Under these Measures, the functions of SRSI and local depository centres include: (i) the establishment

and management of securities accounts and settlement accounts; (ii) the keeping and transfer of securities; and (iii) maintenance of a roster of securities holders as well as the registration of securities holders rights and interests. 113. Both SRSI and local depository centres maintain electronic securities registration, detailing detailed identity information, including the name and address, of every shareholder irrespective of the number of shares held. 24 114. Shareholders trading their securities without permission or otherwise than through an authorised institution are subject to a fine of between 1 to 5 times the amount of the illegal revenue (Security Law Art. 179). Where there is no illegal revenue or where the illegal revenue is less than CNY 300 000 (EUR 35 377), a fine of between CNY 300 000 (EUR 35 377) and 600 000 (EUR 70 755) can be imposed. To ensure compliance with these obligations, the CSRC has set up 38 regional offices 25 (including two supervising offices established in Shanghai and Shenzhen stock exchanges) to identify any non-compliant trading activity. From January 2001 to February 2012, 475 administrative penalties in relation to non-compliance with the CSRC regulations concerning the trading or issuance of securities have been imposed by the CSRC. Further, according to the PRC Supreme Peoples Court, 28 criminal cases for issuing shares without permission and/or trading shares privately were prosecuted over the same period.
Registration of listed securities

115. Article 17 of the Measures provides that an investor must hold securities through a securities account and the securities account must record the balance of securities held by the investor as well as information on the securities transaction. To open a securities account, an investor must file an application with a SRSI (for listed) and provide all his/her particulars, including name, identity number, address, contact etc. (Art. 19). 116. Companies issuing listed securities must entrust an SRSI to handle the registration of the securities (Measures Art. 26). The SRSI must confirm the details of persons holding securities (including name and address of every shareholder) and register them in the roster of securities holders (Art. 28).
24. The securities registration information in the electronic system includes at least the following: the names or titles of the securities holders, the account numbers, valid identity certificate document numbers, the correspondence addresses of the securities holders, the names of the holding securities, the quantity of holding securities, the securities trusteeship organisations and the situations concerning the restricted sales, and the securities holding status such as the judicial freeze and pledge registration. www.csrc.gov.cn/pub/csrc_en/about/organ/#. Some of Chinas 32 regions have established more than one office to deal with this specific topic.
25.
Registration of non-listed securities

117. An investor and a seller must trade the shares with an authorised securities institution and must hold securities through a securities account opened in a local non-listed shares depository centre (Company Law Art. 139). To fulfil this obligation: investors selling securities must register with a local depository centre. This obligation is the result of Article 32 of the Chinese Securities Law and Article 139 of Company Law which clearly stipulate that all shares (listed and non-listed), corporate bonds and other securities shall be quoted and traded on authorised stock exchange institutions or other means prescribed by the State Council 26; and an investor who wants to buy securities in non-listed companies (in registered or bearer form) is also obliged to hold these securities in a securities account maintained by a local non-listed share depositary centre and must therefore open an account to purchase these shares (irrespective of the number of shares held).
118. According to the Measures for the Administration of Securities Registration and Settlement and the Security Ownership Information Registration Rules, upon registration with a local depository centre, the ownership information, including name, identity number and address shall be registered. 119. By the end of December 2010, of Chinas 32 regions, 30 had issued their respective local non-listed shares depositary rules and established regional depositary centres. Chinas authorities have reported that in practice, joint-stock companies located in the two other regions (Tibet and Ningxia) are also effectively covered by neighbouring depositary centres. Chinese authorities have also advised that by the end of 2011, there were 1 646 joint stock companies (with only 4 being foreign invested joint stock companies) registered in these two regions (less than 1% of joint-stock companies incorporated in China - 1 646 joint stock companies out of more than 205 000 such companies across China).
Conclusion
120. Since 1992 joint stock companies have been permitted to issue shares in bearer form. Foreign investors are prohibited from holding bearer securities. All securities, including bearer securities, must be held in a registered account (the holder of which must be identified when the account is opened)
26. The State Council has prescribed that such transfers may also occur by way of local depository centres.

and cannot be transferred anonymously. To trade such securities, both sellers and purchasers must register with a SRSI or a local depository centre and provide upon registration their particulars. These institutions are required under Chinas laws to keep rosters of shareholders, making ownership information pertaining to holders of bearer securities available in China. Although in practice all regions are covered by such centres, two of them have not yet issued any legal rules for registration of such shares and China should ensure the availability of ownership information pertaining to such shares in all instances.
Partnerships (ToR A.1.3) Types of partnerships

121. Partnerships in China are primarily governed by the Partnership Law (revised 2006) and its regulations. Partnerships may be established within China by natural persons, legal persons and other organisations (Art. 2). Wholly state-owned companies, state-owned enterprises, listed companies, institutions for public welfare purposes and social groups are prohibited from becoming general partners. There are four types of partnerships recognised in China: general partnerships, special general partnerships, limited partnerships, and foreign invested partnerships (FIPs). 122. Partnerships can only be set up by written agreement (Partnership Law Arts.4, 14 and 60). General partnerships comprise general partners who bear unlimited joint and several liability for the debts of the partnership (Partnership Law Art. 2.). The Partnership Enterprise Law also provides for a special type of general partnership known as a special general partnership. Professional service institutions offering services requiring professional knowledge and special skills can form special general partnerships (Art. 55). In a special general partnership, a partner or a group of partners bear unlimited liability or unlimited joint liability for the debts incurred to the partnership due to their wilful misconduct or gross negligence. Other partners bear limited liability to the extent of their capital contributions (Art. 57). Rules that apply to general partnerships similarly apply to special general partnerships, except otherwise provided by law. 123. A limited partnership comprises general partners and limited partners. General partners are jointly and severally liable for the debts of the partnership and limited partners are liable only to the extent of their capital contributions (Partnership Law Art. 2). Rules that apply to general partnerships similarly apply to limited partnerships, except as otherwise provided by law.
124. As of 1 March 2010, it is possible to establish a FIP in China based on the Administrative Measures on Registration of FIP under SAIC Order No. 47 (2010). A FIP can be set up by two or more foreign enterprises or individuals or between foreign enterprise(s) or individual(s) and a PRC natural person(s), legal person(s) or other organisation(s) (Art. 2). In addition to the Partnership Enterprise Law, FIPs are subject to the Administrative Measures on Registration of FIP and Chinas foreign investment industry guidelines (Art. 3). 125. Partnerships in China do not file tax returns or pay tax as they do not have distinct legal personalities and are treated as pass-through arrangements for Chinese tax purposes. Partners are taxed on the basis of the profits or losses allocated to them under the partnership agreement (Partnership Law Art. 6). Partners that are legal persons are subject to CIT and individual partners are subject to IIT on their allocable share of partnership income (Issues Concerning the Income Tax Levied on Partners of a Partnership Enterprise Art. 2).
Ownership information on partnerships Business registration with the SAIC

126. Partnerships are administered by and must register with the responsible SAIC authority before they are allowed to carry out business activities in China. Partnerships are provided a business license from the SAIC after successfully completing the registration requirements. The registration process is regulated by the Administrative Rules on Registration for Partnership Enterprises (ARRPE ) (Arts.1, 2, 3). Articles 7 and 8 of the ARRPE provide that, among other things, the following information must be submitted to the responsible SAIC authority upon registration: names and domiciles of the partners, methods for assuming liabilities, and amount of financial contributions as subscribed or actually paid, time limit for financial contributions, and method of financial contributions; identity certificate of all partners; partnership agreement (in the form of a written document); principal business address; and name of the managing partner(s) i.e. partner for dealing with partnership affairs.
127. The SAIC is obliged under Article 45 of the SAIC Order No. 47 (2010) to record the same registration information for a FIP in its Registration

Book. Information maintained by the SAIC is available for the general public to review and make copies. The managing partner is required to notify and make alteration regis128. tration with the original responsible SAIC authority of any amendment to the originally registered information within 15 days of the date of making such alteration or after the decision of alteration is made (ARRPE Art. 11). Partnerships are also required to submit documents to the responsible 129. SAIC authority for inspection on an annual basis (Measures for the Annual Inspection of Enterprises Art. 4). A copy of the annual inspection report must be provided and must, among other things, include the status of the registered items (Arts.7, 9). Responsible SAIC local offices inspect whether partnerships have completed alteration registration (if applicable) (Art. 13). In practice, in 2011, the SAIC concluded 13 207 cases for registering false information with more than CNY 1.1 billion (EUR 119 million) in fines collected and almost 310 000 cases for non-compliance with registration requirements with more than CNY 2.6 billion (EUR 308 million) in fines collected. These statistics cover all types of enterprises i.e. companies and partnerships.
Tax registration with the SAT

130. Partnerships are obliged to register with the SAT authorities within 30 days of obtaining a business license from the SAIC (TRAR Art. 10). During the tax registration, partnerships are obliged to submit, among other things, a tax registration form, partnership business license, partnership agreement, and the identity cards or passports of the partners (Art. 13). Additionally, partnerships must record the name, nationality, identity card/ passport number, and the permanent addresses of all the partners in the tax registration form (Art. 14). 131. Articles 18 and 19 of the TRAR provide that when any of the registered partnership information changes, partnerships are obliged to make an alteration registration with the SAT authorities within 30 days of making the alteration registration with the competent SAIC local office. The SAT is obliged to maintain tax registration information for 10 years (Regulations on Tax Collection and Records Management). In practice, the SAT registration authorities verify whether registered documents are in the prescribed form and that their formulation is in accordance with PRC laws; those who fail to register or intentionally register false information are punished (TRCR, Arts. 44, TCAL, ART. 60).
Information held by service providers

132. Financial institutions covered by the AMLL are required to undertake customer due diligence when establishing a relationship with a partner acting on behalf of a partnership (see above, section A.1.1 of this report).
Information held by the partnership or partners

133. The Partnership Law (Arts.22, 60) provides, in relation to general partnerships and general partners in limited partnerships, that the transfer of all or part of an interest in a partnership to a person other than another partner is subject to the unanimous consent of all the partners. Any limited partner wishing to transfer its interest in a limited partnership to any person other than the partners must, prior to the transfer, inform all the partners by way of notice (Art. 73). This notice is to be sent 30 days prior to the effective transfer. These obligations ensure that the partners identity is known by the other partners at any time. Further, this information can be accessed by the SAT (see section B.1.1 of this report).
Conclusion
134. Ownership information in relation to partnerships must be disclosed upon registration with the SAIC and the SAT. This information must further be updated with these two authorities when it is altered ensuring that this information is available in compliance with the Terms of Reference.
Trusts (ToR A.1.4) Types of trusts

135. Chinese law allows the creation of domestic express trusts. The Trust Law (2001) regulates trust relations and the rights and interests of the parties to a trust. Financial institutions that engage in trust business are additionally regulated by the Administrative Rules for Trust Companies (ARTC ) (Arts.1, 2). The Trust Law applies to all trusts where the civil, business or chari136. table trust activities are carried out within Chinas boundaries (regardless of whether the trust is governed by foreign trust law) (Art. 3). It covers all trust activities in China irrespective of the residence of the settlor or beneficiaries, or the location of the trust assets, provided the trust activities are performed in China. Thus, provided the trust activities are carried out in China, the Trust Law applies equally to trusts established under PRC law, Chinese or foreign trusts which are administered in China, and Chinese and foreign

trusts which have a trustee resident in China whether the trustee is acting by way of business or not. Article 2 of the Trust Law defines trust as the act whereby the sett137. lor, on the basis of confidence in the trustee, entrusts property rights to the trustee and allows the trustee to administer or dispose of such property in the interest of a beneficiary or for any specified purpose. Article 24 provides that a trustee must be a natural or legal person with full civil capacity. Article 19 provides that a settlor can be a natural person, a legal person or an organisation with full civil capacity. Trust assets must be identifiable and legitimately owned by the settlor (Art. 7). Article 43 provides that beneficiaries can be natural persons, legal persons or organisations. Where the trustee is also the beneficiary of a trust, the trustee cannot be the only beneficiary under the same trust (Art. 43). 138. A trust for public welfare purpose is a trust created for one of the following charitable purposes: help the poor; help disaster victims; assist the disabled; education, technology, culture, art and physical education development; medical and sanitation development; environmental protection; or for the benefit of the society (Trust Law Art. 60). The assets and profits of a public welfare trust cannot be used for non-public welfare purposes (Art. 63). Creation of a public welfare trust is subject to the approval of the regulatory agency in charge of public welfare affairs (Art. 62). Article 64 of the Trust Law provides that a public welfare trust must have a trust protector. The name of the trust protector may be contained in the trust deed. Where the trust deed does not contain the name of the trust protector, the trust protector should be appointed by the relevant governmental authority. There is no specific requirement under the Trust Law which requires other trusts to have a trust protector. Under the Trust Law, all Chinese trusts must be created using a writ139. ten trust document (i.e. the trust deed), which must contain inter alia the following information (Arts.8 and 9. See also ARTC Art. 32): the purposes of the trust; names and addresses of the settlor, the trustee and the beneficiaries; the scope, type and status of the trust property; and the ways and methods by which the beneficiary receives the trust proceeds.
140. Chinas authorities reported that the Trust Law was promulgated primarily to govern the professional management of assets and for modernising Chinas financial infrastructure. Its applicability is, however, not limited to trusts in the financial and investment context. Where the trust activity consists of managing assets, trusts are typically formed by trust companies.
Authorised trust companies are the only entities in China that are permitted to act as trustees by the way of business. As at the end of June 2011, there were 63 registered trust companies in China. 141. Trust companies are regulated financial institutions subject to the approval of and supervised by the CBRC (ARTC Arts.2, 5, 7). The ARTC is the primary regulation regarding the establishment and operations of trust companies. A trust company can take the form of a limited liability company or a joint stock company (Art. 6). To establish a trust company, the following conditions must, amongst others, be satisfied (Art. 8): the companys articles of association are in compliance with the Company Law and the provisions of the CBRC; it has shareholders/members who meet the capital contribution qualification as prescribed by the CBRC; it has the minimum registered capital prescribed by the ARTC (CNY 300 million (EUR 35.38 million) (ARTC 10); it has directors and senior management personnel with employment qualifications prescribed by the CBRC and other personnel qualified to engage in trust activities; it has a sound organisational structure, trust business operational guidelines and a risk control system in place; and its business establishment, safety measures and other relevant facilities comply with the requirements.
142. According to the Measures for Administration of Commissioned Overseas Wealth Management Business undertaken by Trust Companies, domestic entities or resident individuals can entrust trust companies to invest and manage their assets in overseas financial markets. Only qualified and authorised trust companies are allowed to engage in the trust business for overseas wealth management. 27
Registration requirements for trusts

143. When provided by law, trusts must register with the relevant government regulatory agency. Business trusts are obliged to register with the Shanghai trust registration centre. Public welfare trusts are obliged to register
27. See Chapters I and II of the Circular of the China Banking Regulatory Commission and the State Administration of Foreign Exchange on the Issues Concerning Promulgation of the Tentative Measures for Administration of Commissioned Overseas Wealth Management Business Undertaken by Trust Companies.

with the regulatory agency in charge of public welfare affairs and obtain relevant approval (Trust Law Art. 62). 144. The Shanghai Trust Registration Centre is the only institution approved by the CBRC that is responsible for registration of business trusts in China. Trusts must be registered with the centre within 10 business days of their establishment. The trust deed which, among other things, contains the names and addresses of the settlor, trustee and the beneficiary must be disclosed to the centre (Trust Law Art. 9). The Shanghai Trust Registration Centre maintains all registered information for 10 years (The Administrative Rules on the Coverage and Retention Period of Archive Files, Annex, 8.7.4). In addition to the trust deed, trusts are obliged to register inter alia the following information with the Shanghai Trust Registration Centre (Art. 24): documents on creation of the trust submitted to the supervisory institution (if any); ownership document of the trust assets (if any); any other information/document required by the Shanghai Trust Registration Centre.
Public welfare trusts are also obliged to register their trust deeds with 145. the regulatory agency in charge of public welfare affairs and obtain relevant approval (Trust Law Art. 62). There are also other strict registration requirements imposed on trust 146. companies, i.e. trust companies are obliged to register with the CBRC, SAIC, and SAT authorities upon their establishment. In particular, trust companies administering trusts must register with the CBRC and obtain its approval before they commence operations of the trust business (ARTC Art. 7). The CSRC is responsible for verifying all material provided by trust companies (Administrative Measures of Trust Company Art. 9) and also carries out inspections on operations of trust companies either on a regular or random basis (Administrative Measures of Trust Company Art. 47). The trading license of a trust company will be revoked by the CBRC in case it provided false information during the registration process. (Administrative Measures of Trust Company Art. 56).
Tax obligations
147. Trustees and beneficiaries fall under the general scope of Chinas income tax laws and regulations, whereby they are required to report and file tax returns with the SAT authority on the taxable income they receive from the trust.
148. Chinese individual tax residents are subject to IIT in respect of their worldwide income (IITL Art. 1; IITL Detailed Implementation Rule Art. 6). Where the trustee or beneficiaries are natural persons, the unit or individual that makes payment to the natural person is obliged to act as a withholding agent (i.e. withhold and pay the IIT on the beneficiaries behalf) (Art. 8). The IIT taxable income calculation method differs depending on the nature of the income. Article 6 provides that where the nature of the income is dividend or interest, the taxable income is the gross income; where the income is on the transfer of assets, IIT is imposed only on the gain. Service income is subject to deduction rules and varying rates depending on the nature of activities (Art. 6). 149. PRC-resident companies are subject to EIT on their worldwide income (EITL Art. 3) and are required to file annual tax returns with the local SAT authority (EITL Art. 54). A resident entity that acts as the trustee of a foreign trust is also required to file tax returns with the SAT on income it receives in connection with the trust (EITL Art. 3 in conjunction with Art. 54). 150. Trust deeds are regarded as a relevant tax documents as they contain the entitlements of the respective beneficiaries and trustees. The SAT is empowered under the TCAL to inspect taxpayers relevant tax documents (Art. 54) and taxpayers are obliged to provide the relevant documents to the SAT upon request (Art. 56). Under the TCAL, trust deeds must be retained in China. Where trust activities are carried out outside China, there is no specific regulation which prohibits a Chinese person from acting as a trustee. However, Chinas income tax law applies to trustees whether they manage a domestic or a foreign trust. Consequently, resident trustees of foreign trusts are obliged to maintain the trust deed, which contains particulars on the ownership of the foreign trust (Trust Law Art. 33). The SAT reports that, in practice, the availability of information on trusts has not posed any problems for exchange of information purposes.
Ownership information held by trustees and trust service providers

151. Trustees are required to maintain a complete record of the trust activities, including the trust deed (Trust Law Art. 33). Trustees are obliged to report the management, utilisation and disposition of the trust property and the income and expenses to the settlor and beneficiary regularly every year (Art. 33). 152. Article 15 of the ARCIV further provides that when a trust company sets up a trust, it must understand the source of the trust assets, keep a copy of the settlors valid identity document, and register the settlors and beneficiarys basic information, including: name, nationality, address, contact details, type of identification document, effective date of the identification

document, and identification document number. The CBRC is empowered to inspect the business activities of trust companies either periodically or on a random basis (ARTC Art. 47). 153. In addition, trust companies are considered financial institutions under the AMLL and are required to know their customers and to keep their identification and transaction information. When a financial institution enters into a trust arrangement with a customer it must verify and register the beneficiarys identification documents (AMLL Art. 16).
Conclusion
154. All trusts, whether created under Chinas law or not fall under the scope of Chinas Trust Law where they carry out activities within the Chinese territory. To fulfil the requirements set out by these laws, trustees of such trusts must keep documents and records and in particular trust deeds where information in relation to beneficiaries and settlors of trusts must be detailed. Finally, trustees of both foreign and Chinese trusts, have reporting obligations with the SAT when paying income to beneficiaries and must make any documents relevant for tax purposes available to revenue authorities. This includes trust deeds of trusts they manage. 155. Business trusts can only be managed by trust companies. Before operating, they must register with the Shanghai Trust Registration Centre and provide ownership information upon registration (names of the settlors and beneficiaries). Trusts companies are also relevant entities under the Anti-Money Laundering Law and must perform CDD and have knowledge of beneficiaries of trusts they manage.
Foundations (ToR A.1.5) Types of foundations

156. Foundation is a recognised concept in China and the Foundation Administrative Rules (FAR) provides the legal framework surrounding foundations established in China. Foundations in China are non-profit legal persons established for public welfare purposes (Art. 2). There are two types of foundations: public foundations (foundations that are allowed to raise funds from the general public) and private foundations (foundations that are prohibited from raising funds from the general public) (Art. 3). In addition, foreign foundations are permitted to set up a representative office in China (Art. 6). As at October 2011, there were 19 representative offices of foreign foundations registered in China.
157. In addition to foundations formed under the FAR, there are public foundations formed and funded by the PRC government (e.g. the National Natural Science Foundation of China). These foundations also accept donations from the general public in addition to government funding.
Registration with the Ministry of Civil Affairs (MCA)

158. The Ministry of Civil Affairs (MCA, at central government level) and its subordinate offices (at provincial levels) (collectively referred to as MCA authorities) are responsible for the registration of foundations in China (FAR Art. 6). The MCA administers registration for the following foundations and representative offices of foundations: public foundations operating at national level with an initial fund of no less than CNY 8 million (EUR 0.976 million); foundation with a non-PRC resident as a legal representative; private foundations with an initial fund of no less than CNY 20 million (EUR 2.44 million), and the initiators have filed application for the establishment to the MCA; and representative offices established by overseas foundations.
159. The subordinate offices of the MCA at provincial level are responsible for administering the registration of foundations that fall outside of the scope of the conditions listed above (FAR Art. 6). Foundations are obliged to register with the responsible MCA author160. ity and have to obtain its approval in the form of a registration certificate before carrying out activities in China (FAR Arts.11, 12, 13). Information that must be submitted to the MCA authority upon registration includes inter alia (Art. 9): names of the foundations legal representative, council members, and secretary, and documents verifying their identities (e.g. identity card or passport); capital verification report of the initial funding (which contains the identities of founders and the amount they contributed to the foundation); address information; and approval letter from the responsible authorities.
Foundations are further obliged to notify the MCA authorities of any 161. changes made to their originally registered information by performing an alteration registration with the MCA (FAR Art. 15).

162. Article 36 of the FAR provides that foundations and representative offices of overseas foundations must submit annual work reports to the original MCA authority. This annual work report has to be published after the annual inspection via authorised media (FAR Art. 38). It must include the following information (Art. 36; Administrative Measures for the Information Disclosure of Foundations Arts.4 and 5): financial statements; audit report issued by a certified public accountant; donation activities performed; Welfare funding projects undertaken by the foundation; donations received; how the fund is spent; and changes to the foundations structure or personnel, etc.
163. The audit report (included in the annual work report) must contain inter alia the following information (Foundation 2010 Annual Audit Report [demonstration version]): name of the foundations legal representative(s); name of the foundation council member(s); name of person(s) whose donation accounts for more than 5% of the total donation received by the foundation in that particular year; and names of person(s) who received funds from the foundation which amount to 1% (or more) of the total funds paid out by the foundation for that particular year.
164. The MCA is the authority responsible for keeping the registration records of foundations, including the documents submitted to the MCA for initial registration, alteration registration, deregistration, and annual inspection. The registration records are maintained indefinitely (Social Organization Registration Records Management Approach Art. 11). The records are maintained by the MCA for 10 years after a foundation is liquidated, and subsequently they are transferred to the State Archive Centre (Art. 12).
Tax registration with the SAT

165. After completing registration with the MCA authority, foundations are obliged to conduct tax registration with the responsible SAT authority (FAR Art. 14). For tax registration, foundations are obliged to submit,
amongst other things, a tax registration form, an approval letter from the relevant responsible MCA authority, articles of association, and the identity card or passport of the legal representative (TRAR Art. 13). The tax registration form must include the name, nationality, identification card/passport number, and the permanent addresses of the foundations legal representative (Art. 14). Articles 18 and 20 of the TRAR provide that foundations are obliged to make alteration registration with the responsible SAT authority within 30 days of any change to previously registered information. 166. Article 26 of the EITL provides that qualified not-for-profit organisations are exempt from income tax. To qualify for the EIT exemption, foundations are obliged to submit inter alia the following information to the responsible SAT authority: the foundations articles of association (which contain the names of the foundation council members and legal representative) (FAR Art. 10); financial statements and audit report issued by a qualified agency; a statement of the foundations source of income and spending; and annual inspection report issued by the responsible MCA authority (Circular on Issues Relating to the Recognition and Administration of Tax-exemption Qualification of Non-profit Organizations Art. 3).
167. Information concerning the members of the foundation council has to be clearly specified in the foundations articles of association (FAR Art. 10). The identity of the founder is reported in the capital verification report which the foundation must prepare and submit to the MCA during the initial registration (Art. 9). For tax purposes, foundations are required to complete annual Enterprise Income Tax returns. Foundations are obliged to maintain accounting records, vouchers, tax returns and other relevant information (TCAL Art. 24). The capital verification report and articles of association are part of the original supporting documents/vouchers that must be kept for tax purposes.
Information maintained by the foundation

168. To comply with the registration, annual inspection, and record keeping requirements specified under the FAR, Measures for the Information Disclosure of Foundations, and TCAL, foundations are obliged to maintain the names, addresses and identity card numbers of the foundations founders and council members, people who make donations to the foundation, and people who receive funds from the foundation (i.e. beneficiaries) (FAR Arts.9, 10, Measures for the Information Disclosure of Foundations Arts.4, 5; TCAL Art. 24).

169. Article 20 of the FAR provides that a foundation must have a council consisting of 5 to 25 members. The head of the foundation council is responsible for ensuring that the foundation is in compliance with applicable PRC laws (FAR Arts.20, 43). Accordingly, the head of the foundation council will have knowledge and access to the aforementioned identity information.
Information held by service providers

170. Financial institutions covered by the AMLL are required to undertake customer due diligence when establishing a relationship with a representative (e.g. foundation council member) acting on behalf of a foundation (see above section A.1.1 of this report)).
Conclusion
171. Chinas legal framework ensures the availability of ownership information in relation to foundations. Foundations are non-profit organisations set up for charitable purposes that are highly monitored by government authority. Upon registration with the Ministry of Civil Affairs or its subordinate office, foundations must provide the names of their founders and council members. This information is also required to be disclosed in the annual audit report. The same information must be provided to the SAT for registration and documentation including the identity of beneficiaries must be kept for tax purposes.
Enforcement provisions to ensure availability of information (ToR A.1.6)

172. The existence of appropriate penalties for non-compliance with key obligations is an important tool for jurisdictions to effectively enforce obligations to retain identity and ownership information.
Companies
173. The Company Law provides a variety of penalties to ensure that accurate information is maintained on the legal ownership and control of companies in China. Article 199 of the Company Law and Article 69 of ARCR provide that a company which obtains a business license by submitting false materials or concealing important facts by other fraudulent means can be subject to a fine of between CNY 50 000 (EUR 5 896) and CNY 500 000 (EUR 58 962). In serious cases, the companys business license can be revoked (ARCR Art. 69). Article 212 of the Company Law and Article 73 of ARCR provide that if a company fails to make alteration registration with SAIC authorities of any changes to previously registered information (including changes in ownership),
the company is subject to a fine of between CNY 10 000 (EUR 1 179) and CNY 100 000 (EUR 11 792). Foreign companies are subject to the same penalties (Registration of Enterprises of Foreign Countries (Regions) Engaged in Production and Business Activities within the Territory of China Art. 17; see also Detailed implementation Rules Art. 63). In 2011, the SAIC concluded more than 13 000 cases for registering false information with more than CNY 1.1 billion (EUR 119 million) in fines collected; and concluded close to 310 000 cases for non-compliance with registration requirements with more than CNY 2.6 billion (EUR 308 million) in fines collected. These statistics cover all types of enterprises i.e. companies and partnerships. 174. If the articles of association for a company are not submitted to the relevant PRC government bodies (SAIC and SAT local tax offices), neither business nor tax registration will be approved for the company (Procedures for the Administration of Tax Registration Arts.13, 14). 175. Article 158 of the Criminal Law provides that whoever, when applying for company registration, obtains registration by deceiving the SAIC authorities through falsely declaring the capital to be registered with falsified certificates or by other deceptive means can, if the amount of the falsely registered capital is large, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and/or be fined between 1% and 5% of the capital falsely declared for registration. The Chinese authorities report that in practice, the amount of the fine is determined on the basis of the nature, circumstance and consequence of the crimes. Between 2002 and 2011, China Peoples Courts concluded 2227 cases involving the provision of false register information, including 285 cases in 2011. Additionally, where a unit commits the crime as described in Article 158, it can be fined, and the persons who are directly in charge and the other persons who are directly responsible for the crime can be sentenced to fixed-term imprisonment of not more than three years or criminal detention. 176. Shareholders trading their securities without permission or not through an authorised institution are subject to a fine of between 1 to 5 times the amount of the illegal revenue (Security Law Art. 179). Where there is no illegal revenue or where the illegal revenue is less than CNY 300 000 (EUR 35 377), a fine of between CNY 300 000 (EUR 35 377) and 600 000 (EUR 70 755) can be imposed. To ensure compliance with these obligations, the CSRC has set up 38 regional offices 28 (including two supervising offices established in Shanghai and Shenzhen stock exchanges) to closely monitor these activities. From January 2001 to February 2012, 475 administrative penalties in relation to non-compliance with the CSRC regulations concerning the trading or issuance of securities have been imposed by the CSRC.
28. www.csrc.gov.cn/pub/csrc_en/about/organ/#.

Further, according to the PRC Supreme Peoples Court, 28 criminal cases for issuing shares without permission and/or trading shares privately were prosecuted over the same period.
Anti-money laundering
177. Failure to comply with anti-money laundering and customer due diligence obligations under the AMLL and its implementing rules subjects the offender (e.g. financial institution) to a fine not exceeding CNY 500 000 (EUR 58 962). Moreover a fine not exceeding CNY 50 000 (EUR 60 976) will be imposed on persons directly responsible for the violation (including directors, management, and other directly responsible persons). Where the violation constitutes money laundering, fines not exceeding CNY 5 million (EUR 589 623) may also be imposed on the financial institution and the person responsible respectively. In addition, trading licenses of financial institutions can be revoked (AMLL Art. 32). Article 31 of ARCIV provides that the PBOC is empowered to impose 178. penalties specified under Articles 31 and 32 of the AMLL on the financial institution and on its directors, senior management and employees directly responsible. Furthermore, the PBOC may recommend that the CBRC, the CIRC, and the CSRC revoke the financial institutions trading license, remove the director, senior management and the responsible employee from their positions and ban them from working in the financial industry. 179. In 2010, the PBOC received 240 million big transaction reports and 62 million suspicious transaction reports. The PBOC also conducted 2 426 in-field investigations on financial institutions regarding their AML implementation. Approximately CNY 22 million (EUR 2.594 million) in penalties was imposed on financial institutions not fully in compliance.
Partnerships
180. Where a partnership operates in China without first registering with the SAIC local office and obtaining a business license, the SAIC local office is empowered to impose a fine of up to CNY 50 000 (EUR 5 896) on the partnership (Administrative Measures for the Registration of Partnership Enterprises Art. 26). Where a partnership does not complete alteration registration of any amendment, the SAIC is empowered to impose a fine of up to CNY 20 000 (EUR 2 358) on the partnership (Art. 28). In practice, in 2011, the SAIC concluded almost 310 000 cases (including all types of enterprises) for non-compliance with registration requirements (with more than CNY 2.6 billion (EUR 308 million) of fines collected. These statistics cover all types of enterprises i.e. companies and partnerships.
181. Article 93 of the Partnership Law provides that where partnership enterprise registration was obtained by submission of false documents or by other fraudulent means, the SAIC can order correction thereof and impose a fine between CNY 5 000 (EUR 590) and 50 000 (EUR 5 896). In serious circumstances, the enterprise registration can be revoked and the SAIC can impose a fine between CNY 50 000 (EUR 5 896) and CNY 200 000 (23 585 EUR).
Trusts
182. Trust deeds of business trusts must be registered with the Shanghai Trust Registration Centre. The trust has no lawful effect if registration is not performed. Under Article 10 of the Trust Law, where the trust property is required to be registered in accordance with the provisions of laws or administrative regulations, such property must be registered to give lawful effect to the entrustment of assets.
Foundations
183. Article 40 of the FAR provides that where a foundation carries out activities that are not registered with the MCA authorities, the MCA authorities are empowered to confiscate the foundations assets. Additionally, the MCA authorities are empowered to deregister a foundation (whereby the foundation will no longer be allowed to carry out its activities in China) if the foundation does not notify the MCA authorities of any changes to registered information or does not perform the annual inspection (FAR Art. 42). The MCA authorities will also notify the responsible SAT authorities and ask them to request the foundation to surrender any tax incentives received during the period that the foundation was in violation of the FAR. 184. If a foundation suffers a loss as a result of the foundation councils misconduct (including not completing the annual inspection), the foundation council members responsible for such misconduct will be liable for repaying the foundation on the loss incurred (FAR Art. 43). A fine not exceeding CNY 50 000 (EUR 5 896) can also be imposed on a foundation that does not maintain the necessary accounting documents/information as required under the Accounting Law (Accounting Law Art. 42).
Tax
185. Chinas tax laws impose a wide range of civil and criminal penalties for failure to comply with statutory tax filing, disclosure and registration requirements. Article 42 of the TRAR and other relevant tax regulations provide that failure to complete tax registration, alteration registration or providing false information during the tax registration is subject to penalties

provided under Article 60 of the TCAL (TRAR Art. 42). Article 60 of the TCAL provides that the SAT authorities can require any person to remedy any of the following acts within a specified time limit and may impose a fine not exceeding CNY 2 000 (EUR 236) on the taxpayer (for egregious offenses, the SAT authorities may impose a fine between CNY 2 000 (EUR 236) and CNY 10 000 (EUR 1 179)) that: fails to apply for tax registration, changes or cancels tax registration within a prescribed time limit; fails to keep or maintain accounting books, or maintain supporting vouchers for the accounts and the relevant information in accordance with the relevant provisions; fails to provide reports on the financial and accounting systems or the financial and accounting methods and accounting software to the tax authorities for possible reference use in accordance with the relevant provisions; fails to report all bank account numbers to the SAT as required; and fails to install and use tax control tools as required, or damages or alters tax control tools without approval.
If a taxpayer fails to accomplish tax registration, the SAT authorities 186. order the taxpayer to make a correction within a specified time limit. If the taxpayer fails to respond as scheduled, the SAIC authorities will revoke the taxpayers business license upon request from the SAT authorities. Further, if a taxpayer fails to use the tax registration certificate as required or lends, tampers, damages, buys, sells or forges the tax registration certificate, a fine between CNY 2 000 (EUR 236) and CNY 10 000 (EUR 1 179) can be imposed. 187. Article 62 of the TCAL provides that where a taxpayer fails to fulfil tax filing requirements and submit tax payment materials within a prescribed time limit, the SAT authorities may impose a fine not exceeding CNY 2 000 (EUR 236) on the taxpayer. For egregious cases, the SAT authorities may impose a fine ranging between CNY 2 000 (EUR 236) and CNY 10 000 (EUR 1 179) on the taxpayer. The Chinese authorities have reported that in year 2011, 212 000 cases were audited by the SAT and CNY 92.35 billion (EUR 11 billion) of tax revenue (including late payment surcharge and fines) was collected during these audits. 29 188. Article 32 of the Provisional Measures on the Tax Collection and Administration of Non resident Companies and Individuals Engaging in Contracted Projects and Provision of Services (NRTPM ) provides that the
29. Source: www.ctaxnews.com.cn/syxw/xwxzt/201201/t20120129_1584662.htm.
SAT authority is empowered to impose the penalties specified under the TCAL on non-resident enterprises. Article 33 of NRTPM provides that where a PRC-resident entity or individual who engages a foreign company does not notify the SAT authority of the engagement, they are subject to a fine not exceeding CNY 10 000 (EUR 1 179). 189. Article 77 of the TCAL provides that where a criminal act is suspected, the SAT authority must transfer the case to the judicial department to pursue criminal liability. In 2009, there were 3 009 cases transferred to the judicial department. The cases are posted on the SATs official website. The Criminal Law provides for various criminal tax penalties. In particular, any taxpayer who fails to pay or underpays the amount of taxes payable by means of forging, altering, concealing or destroying account books or vouchers for the accounts, or overstating expenses or omitting or understating income in account books, or refusing to file their tax returns after the SAT authorities have notified them to do so or filing false tax returns will be sentenced to a fixed-term imprisonment not exceeding three years (Criminal Law Art. 201; Criminal(Amendment) Law, Art. 7 ). Where a unit commits a tax crime, it will be fined, and the persons who are directly in charge and the other persons who are directly responsible for the crime will be punished in accordance with the provisions of the Criminal Law (Art. 211.) 190. The SAT authorities report that most individuals and businesses voluntarily meet the PRC Governments requirements to provide complete and accurate information on time. Chinas compliance culture is complemented by the SAT authoritys broad powers to compel the production of information from natural and legal persons (see Section B of this report). The SAT authority has powers of discovery and inspection, and can compel production from taxpayers and third parties of any document deemed relevant. 191. There is a variety of penalties under Chinas laws to ensure that information required to be maintained is, in fact, maintained. The penalties appear to be largely effective and dissuasive enough to ensure compliance. Most of Chinas laws provide a range of penalties, including small to large monetary fines depending on the level of infraction and imprisonment in serious cases. In addition, the SAT authority is able to respond to requests for ownership and identity information for all types of legal entities and arrangements. Information received from partner jurisdictions with an exchange of information relationship with China confirms this.

Determination and factors underlying recommendations
Phase 1 determination The element is in place. Factors underlying recommendations Not all of the regions in China have implemented legal provisions that ensure ownership information in relation to bearer shares is available. Recommendations All of the regions in China should implement provisions ensuring the availability of ownership information in relation to bearer shares.
Phase 2 rating Compliant.
A.2. Accounting records

Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements.
192. The Terms of Reference sets out the standards for the maintenance of reliable accounting records and the necessary accounting record retention period. It provides that reliable accounting records should be kept for all relevant entities and arrangements. To be reliable, accounting records should: (i) correctly explain all transactions; (ii) enable the financial position of the entity or arrangement to be determined with reasonable accuracy at any time; and (iii) allow financial statements to be prepared. Accounting records should further include underlying documentation, such as invoices, contracts, etc. Accounting records need to be kept for a minimum of five years. 193. The MOF (Ministry of Finance) is responsible for developing Chinese accounting standards. To exercise this function, the MOF set up the Accounting Regulatory Department. In addition, and in line with the Certified Public Accounting (CPA) Law (1993), the MOF supervises and guides the CPA profession and approves all accounting standards.
General requirements (ToR A.2.1)

194. Entities operating in China are required to maintain accounting records under the Accounting Law, TCAL (Tax Collection and Administration Law) and various detailed accounting regulations and accounting standards specific to particular types of entities (units). The Accounting Law and TCAL contain provisions requiring the maintenance of accounting records that correctly explain all transactions, enable the financial position of relevant units
and arrangements to be determined with reasonable accuracy at any time, and allow financial statements to be prepared. Other specific laws and regulations, as described below, add to or reinforce the record-keeping requirements contained in the Accounting Law and TCAL.
Accounting law
195. Article 3 of the Accounting Law provides that all companies, enterprises, institutions and other organisations 30 are obliged to set up accounting books and ensure that they are authentic and complete. Articles 21 and 50 provide that the person responsible for the unit must ensure that accounting records are correct, orderly, and complete. The responsible person is defined as the person who is empowered to represent the unit (Art. 50). Article 10 provides that the following business transactions and operational matters must be recorded in the accounting books: receipt and disbursement of cash holdings and valuable securities; receipt, issuance, additions, reductions and use of money and properties; creation and settlement of debts and claims; increases and decreases in capital and funds; computation of revenue, expenditures, expenses and costs; computation of financial results; and other matters subject to accounting procedures and accounting practice.
196. Article 9 of the Accounting Law provides that every unit must prepare accounting vouchers, accounting books and financial statements and reports. Accounting information must be prepared on the basis of the transactions and events that have actually occurred and should truly reflect the financial position, operating results and cash flows of the unit. In addition, accounting treatments must be consistently applied throughout different accounting periods (Business Enterprise Accounting System Art. 11). 197. Article 42 of the Accounting Law provides that where any unit commits inter alia any of the following acts, the MOF may impose a fine between CNY 3 000 (EUR 354) and CNY 50 000 (EUR 5 896) upon the unit and between CNY 2 000 (EUR 236) and CNY 20 000 (EUR 2 358) on the persons directly in charge and other persons directly responsible:
30. Chinas authorities reported that other organisations as specified in Art. 2 of the Accounting Law includes trustees in respect of trusts they manage and foundations.

no account books are kept in accordance with the law; account books are kept secretly; account books are recorded on the basis of accounting vouchers which are not examined and verified or account books that do not conform to the provisions are recorded; and failure to keep accounting documents in accordance with the law, which results in destruction and loss of such accounting documents.
198. Committing one of the above acts is a crime, and criminal liabilities may be investigated in accordance with the Criminal Law (Accounting Law Art. 42). Where accounting personnel commit one of the above acts and the circumstances are serious, the MOF will revoke the practice qualification certificates of the accounting personnel found responsible (Art. 42). 199. Article 43 of the Accounting Law further provides that it is a crime to forge or alter accounting vouchers or account books, or to prepare false financial and accounting reports. Article 44 also provides that a crime is committed if the accounting vouchers, account books or financial and accounting reports that should be kept in accordance with the law are concealed or intentionally destroyed. In these cases, the MOF can impose a fine between CNY 5 000 (EUR 590) and CNY 100 000 (EUR 11 792) on the unit and between CNY 3 000 (EUR 354) and CNY 50 000 (EUR 5 896) on the persons directly in charge and other persons directly responsible.
Tax law
200. Article 19 of the TCAL provides that all taxpayers (including companies, partnerships, trusts, foundations, individuals) and withholding agents must retain accounting books in accordance with the administrative rules and regulations issued by the MOF and the SAT and maintain such records based on legitimate and valid vouchers and other documentary evidence. 201. Taxpayers engaged in business operations are obliged under the TCAL to maintain accounting records, vouchers, tax vouchers and other relevant information (Art. 24). Article 29 of the TCAL specifically provides that taxpayers are obliged to prepare and maintain accounting books, accounting vouchers, financial statements, invoices, tax payment receipts, export documentation, and other relevant tax documents (e.g. contracts) for at least ten years. 202. Failure to keep or maintain accounting books, or maintain supporting vouchers for the accounts constitutes a crime leading to the revocation of the units business license and/or a fine between CNY 2 000 (EUR 236) to CNY 10 000 (EUR 1 179) (TCAL Art. 60). Where a withholding agent fails
to keep and maintain accounting books for the tax withheld and remitted or collected and remitted, or fails to maintain supporting vouchers for the accounts and the relevant information in respect of the tax withheld, the SAT authorities can impose a fine between CNY 2 000 (EUR 236) to CNY 5 000 (EUR 590) on the withholding agent (Art. 61). 203. Failure to pay or underpay the amount of taxes payable by means of forging, altering, concealing or destroying without authorisation accounting books or vouchers for the accounts or overstating expenses or omitting or understating income in accounting books constitutes a criminal offence, subject to a prison term not exceeding 7 years (Criminal Law Art. 201) 204. As mentioned, additional accounting record retention obligations are imposed in other laws and regulations that add to or reinforce the recordkeeping requirements contained in the Accounting Law and TCAL. These laws and regulations are specific to particular types of legal entities and arrangements and are detailed below.
Companies
205. All companies operating in China (including FIEs) must comply with the accounting and record keeping obligations under the Accounting Law, TCAL, and Company law (Company Law Arts.18, 164, 165; LWFOE Art. 18; LEJV Art. 2; LCJV Art. 15). In addition, companies must comply with the Business Enterprise Accounting System which is formulated based on the Accounting Law, and is issued by the MOF. 206. Under the Company Law, companies are obliged to set up an accounting system and prepare financial reports (Arts.164, 165). Companies must, after the end of each financial year, draft a financial report and have it audited by an accounting firm. The financial report must be prepared in accordance with PRC laws and administrative regulations (Art. 165). All shareholders/ members are entitled to consult and copy the companys accounting records and financial reports (Art. 34). 207. Where a company falsifies records or conceals any important matter in materials such as financial and accounting statements submitted to relevant PRC government authorities (e.g. SAIC, SAT), the relevant authority can impose a fine between CNY 30 000 (EUR 3 538) and CNY 300 000 (EUR 35 377) on the person or persons directly responsible (Company Law Art. 203). Additionally, any company that maintains any set of accounts that differs from its statutory accounting books in violation of the Company Law will be ordered to remedy the defect and also be fined between CNY 50 000 (EUR 5 896) and CNY 500 000 (EUR 58 962) (Art. 202).

208. Article 161 of the Criminal Law provides that it is a criminal offence for a company to submit false financial and accounting records or reports concealing important facts to shareholders/members and the general public. The persons who are directly in charge and the other persons who are directly responsible for the crime will be sentenced to fixed-term imprisonment of not more than three years or criminal detention and/or be fined between CNY 20 000 (EUR 2 358) and CNY 200 000 (EUR 23 585).
Partnerships
209. All partnerships operating in China (including FIPs) must comply with the accounting and record keeping obligations under the Accounting Law, TCAL, and Partnership Law (Partnership Law Art. 36). In addition, partnerships must comply with the Business Enterprise Accounting System issued by the MOF. 210. Article 36 of the Partnership Law provides that partnerships are obliged to establish financial and accounting systems in accordance with PRC laws and administrative regulations. Article 11 of the Administrative Measures on Registration of FIP provides that FIPs must follow the relevant PRC laws, administrative regulations and state regulations on accounting and tax matters, foreign exchanges customs, and immigration issues. 211. Where partnership affairs are executed by one or more partners, those partners are obliged to regularly report to the other partners regarding the execution of partnership affairs. The operation and financial conditions of the partnership and all income from their execution of partnership affairs belongs to the partnership, and the expenses and losses are borne by the partnership (Partnership Law Art. 28). For the purpose of understanding the operation and financial conditions of the partnership, the partners are entitled to inspect and copy financial data including the accounting books of the partnership (Art. 28). 212. Article 31 of the Administrative Rules on Registration for Partnership Enterprises provides that partnerships are required to complete an annual inspection by the relevant SAIC authorities. Among the documents submitted to the SAIC are audit reports, balance sheets, and income statements.
Trusts
213. Several laws require trustees in China to keep accounting records. First, the Trust Law contains specific rules dealing with record keeping requirements. Second, trusts are considered as units and trustees in China and must consequently comply with the accounting and record keeping
obligations under the Accounting Law and the TCAL. Finally, trustees of business trusts must also comply with the Accounting Rules for Trust Companies (ARTC) and Accounting Rules for Trust Business (ARTB). 214. Article 29 of the Trust Law provides that a trustee must keep a separate account for the trust assets. More specifically, trust assets from different settlors must be recorded separately (Art. 29). A trustee is also required to maintain complete records in relation to the operation and management of the trust, including a record of the income and expenditure of the trust (Art. 33). 215. Article 30 of the ARTC provides that trust companies are obliged to set up accounts in accordance with PRC laws, prepare separate accounts for trust business and non-trust business and perform separate accounting for each trust business. Article 28 provides that trust companies must properly keep the full record of trust affairs they have handled, and periodically report to the settlor and the beneficiary on the status of trust property, the management and use, and disposal and income and expenditure thereof. The settlor and the beneficiary have the right to information regarding the management and use, disposal and income and expenditures of the trust property and to request the trust company to provide explanations (Art. 28). 216. Article 1(2) of the ARTB provides that each business trust should be treated as an independent unit for accounting purposes. Article 1(3) provides that the accounts for a trust must include trust assets, trust liabilities, trust rights and interests, trust income, trust expenditures, and trust profit. Article 1(11) provides that the accounting records maintained for trusts must comply with Administrative Measures for Accounting Files (AMAF ). 217. Trust companies, as financial institutions, are also obliged to comply with the Accounting Rules for Financial Institutions. Article 58 of the Accounting Rules for Financial Institutions provides that trust companies are obliged to submit their financial statements annually to the MOF. Annual financial statements must be audited by an accounting firm (art. 58).
Foundations
218. All foundations operating in China must comply with the accounting and record keeping obligations under the Accounting Law, TCAL, and FAR (Accounting Law Art. 2). Foundations must also comply with the Annual Inspection Measures for Foundations (AIMF ) and the Accounting Rules for Non-profit Social Organisations. 219. Article 36 of the FAR provides that a foundation is required to submit financial statements and an audit report to the MCA local office each year for annual inspection. Article 4 of the AIMF provides that the foundations

financial statements must comply with the Accounting Rules of Non-profit Social Organisations. 220. Article 8 of the Accounting Rules for Non-profit Social Organisations provides that accounting information must be prepared on the basis that transactions and events have actually occurred and should truly reflect the financial position, operating results, and cash flows of the entity. In addition, accounting treatments must be consistently applied throughout different accounting periods.
Underlying documentation (ToR A.2.2)

221. Under the Accounting Law and the TCAL, all companies (including FIEs), partnerships (including FIPs), trusts, and foundations have a statutory obligation to maintain underlying accounting documentation (Accounting Law Arts.9, 10; TCAL Arts.24, 29). Underlying documentation required to be maintained includes accounting books, accounting vouchers, financial statements, invoices, tax payment receipts, export documentation, and other relevant tax documents (e.g. contracts) (Accounting Law Art. 9; TCAL Art. 29). Article 15 of the Accounting Law provides that accounting books must be recorded based on original accounting vouchers which are examined and verified. 222. The SAT has also developed non-binding statements of guidance and principles to assist taxpayers to meet their tax and record keeping obligations. Such guidance is available on the SAT website as well as at each local branch/bureau of the SAT. In particular, the information provides guidance on the types of accounting records and underlying documentation required to be maintained. 223. Several of Chinas exchange of information partners who provided input regarding the review of China noted that China has been able to provide underlying documentation, including receipts, invoices, transaction records, and contractual agreements, in response to specific requests for exchange of information.
Document retention (ToR A.2.3)

224. Article 8 of the Administrative Measures for Accounting Files (AMAF ) provides the relevant accounting record retention obligations for all units. 31 The retention periods for accounting records is fixed (between 5 and
31. Article 1(11) of the Accounting Rules for Trust Business (ARTB) specifically clarifies that the accounting records kept for business trusts should comply with the AMAF.
25 years) or indefinite and varies depending on the type of document (Art. 8). The Chinese authorities specify that the minimum retention periods, as calculated from the end of the relevant fiscal year is, for different accounting records, the following:
Document type Vouchers Original vouchers Account vouchers Summary vouchers Accounting books General ledgers Sub-ledgers Journals* Fixed asset registers Auxiliary accounting books Financial statements Annual financial statements Others Bank reconciliations Bank statements List of stored accounting records List of destroyed accounting records 5 5 Indefinite Indefinite Indefinite 15 15 15 5 years after the disposal of the fixed asset 15 15 15 15 Minimum retention period (years)
*Cash and bank journals must be kept for a minimum of 25 years.
225. Accounting information must be kept in China. Article 18 of the AMAF provides that all units operating in China must retain their accounting records in this country. 226. For tax purposes, Article 29 of the TCALIR provides that accounting books, accounting vouchers, financial statements, tax payment receipts, invoices, exportation documents and other tax related information (e.g. contracts) must be maintained for at least 10 years. 227. Information received from Chinas peers notes that in all cases China has been able to provide the requested accounting records.

Phase 1 determination The element is in place. Phase 2 rating Compliant.
A.3. Banking information

Banking information should be available for all account-holders.
228. The CBRC, the regulatory authority for the banking sector since 2003 is a ministerial-level organisation subordinated to the State Council. It is entrusted with the regulation and the supervision of banking institutions, asset management companies, trust companies and non-bank financial institutions in China. 229. Commercial banks, by law, are authorised to provide the following services: accept public deposits, fund short-term, medium-term and long-term loans, settle both domestic and overseas accounts, handle bill acceptance and discount, issue financial bonds, issue and sell government bonds as agents, buy and sell government bonds and financial bonds, engage in inter-bank lending and borrowing, buy and sell foreign exchange, provide bank card services, provide letter of credit service and guarantees, handle receipts, payments and insurance business as agents, provide safe deposit boxes, and undertake other business as approved by the banking regulatory authority under the State Council (Law of the Peoples Republic of China on Commercial Banks (revised 2003) Art. 3). 230. A commercial bank or financial institution may be established solely with the approval of the CBRC. Non-compliance will be considered an offence under criminal law and prosecuted accordingly. Article 174 of the Criminal Law provides that whoever establishes a commercial bank or any other banking institution without the approval of the CBRC will be sentenced to a fixed-term imprisonment of not more than three years or criminal detention and/or fined between CNY 20 000 (EUR 2 358) and CNY 200 000 (EUR 23 584). Under serious circumstances, the offender will be sentenced to fixed-term imprisonment between three years and ten years and fined between CNY 50 000 (EUR 5 896) and CNY 500 000 (EUR 58 962).
Record-keeping requirements (ToR A.3.1)

231. The AMLL requires banks and other financial institutions 32 to perform customer due diligence. To this extent, financial institutions must verify and maintain the records of the identities and transactions of all their customers (AMLL, Art. 16 and 19). Article 9 of the AMLRFI provides that financial institutions must understand their clients aim for carrying out the transaction and understand the nature of the transaction. Article 3 of ARCIV also provides that a financial institution must act with due diligence and take appropriate measures to know its customers and the purpose and nature of the transaction carried out by them. When the customer is likely to be engaged in money laundering or terrorism financing, the financial institution must identify the natural person who is actually controlling the customer (i.e. the ultimate shareholder where the customer is not a natural person), and persons actually benefiting from the transaction. 232. Financial institutions must maintain a number of records facilitating the proper identification of their clients. Records on a customer being a natural person must contain the client name, nationality, address, contact details, type of the identification document, effective date of the identification document, and identification document number (ARCIV Art. 33). Records on a legal person or other organisation must contain the name, address, business scope, organisation identification code, tax registration certificate number, business license (or other types of license which allows the entity to conduct operations) number, name and identification document of the clients actual shareholder with controlling power, and name and identification document of the clients legal representative (Art. 33). 233. For every transaction conducted, financial institutions must maintain such records as are reasonably necessary to facilitate reproducing that transaction readily (ARCIV Art. 3). Where a customer remits money, financial institutions are obliged to record remitters name, address and account number and the receivers name, and address (or the address of the organisation receiving the transfer) (Art. 10). If a financial institution receives money remitted from abroad, it should record the name, account number and address of the person making the remittance. If the person making the remittance did not open a bank account overseas, the financial institution should record other information necessary to ensure the transaction can be traced (Art. 10). 234. Financial institutions must maintain customers identity details, data information, business vouchers and books for all transactions within stipulated periods: client identity details must be maintained for at least five years
32. The term financial institutions refers to policy banks, commercial banks, credit cooperatives, post and saving institutions, trust and investment companies, securities firms, futures brokerage companies, and insurance companies (AMLL Art. 34).

from the date the business relationship terminates and transaction information must be maintained for at least five years from the date the transaction terminates (AMLL Art. 19). 235. Failure to conduct anti-money laundering and customer due diligence obligations under the AMLL and its implementing rules subjects the offender (e.g. financial institution) to a fine of up to CNY 500 000 (EUR 58 962). In addition persons who are directly responsible for the violation (including directors, management, and other directly responsible persons) will be punished by fine up to CNY 50 000 (EUR 5 896). Where the violation constitutes money laundering, fines of up to CNY 500 000 million (EUR 58 962) and CNY 5 million (EUR 589 623) may be imposed on the financial institution and the person responsible, respectively. In addition, trading licenses of financial institutions can be revoked (AMLL Art. 32). 236. Article 31 of the ARCIV provides that the PBOC is empowered to impose penalties specified under Articles 31 and 32 of the AMLL on the financial institution and on its directors, senior management and employees directly responsible. Furthermore, the PBOC may recommend the CBRC, the CIRC, and the CSRC to remove the financial institutions trading license, remove the director, senior management and the direct responsible employee from their positions, and ban them from working in the financial industry. Article 176 of the Criminal Law provides that whoever illegally takes 237. in deposits from the general public or does so in disguised form will be sentenced to fixed-term imprisonment of not more than three years or criminal detention and/or fined between CNY 20 000 (EUR 2 358) and CNY 200 000 (EUR 23 585). Where a unit commits the crime, it will be fined, and the persons who are directly in charge and the other persons who are directly responsible for the crime shall be punished, according to Article 176. 238. There are sufficient legal obligations in place for banks and other financial institutions to maintain all records pertaining to accounts as well as to related financial and transactional information in China. Furthermore, input received from Chinas peers indicates that China is able to exchange bank records for all types of legal entities and arrangements. China reports that bank information is maintained for all clients and that its competent authority has not encountered issues regarding availability of bank information, both for domestic tax cases and for providing exchange of information assistance.

COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION 73
B. Access to Information
Overview
239. 237. A variety of information may be needed in a tax enquiry and jurisdictions should have the authority to obtain all such information. This includes information held by banks and other financial institutions as well as information concerning the ownership of companies or the identity of interest holders in other persons or entities, such as partnerships and trusts, as well as accounting information in respect of all such entities. This section of the report examines whether Chinas legal and regulatory framework gives the authorities access powers that cover all relevant persons and information and whether rights and safeguards are compatible with effective exchange of information. It also assesses the effectiveness of this framework in practice. Chinas tax authorities (the SAT) have the necessary powers to obtain 240. bank, ownership, identity, and accounting information and have enforcement measures to compel the production of such information. The ability of the SAT authorities to obtain information for exchange of information purposes is derived from their general access powers under the TCAL and the SAT Notice on Protocol for International Exchange of Tax Information coupled with the authority provided by the relevant exchange of information agreements. 241. There is no limitation on the SAT authorities power to obtain information either from taxpayers or from third parties in possession or control of information. The SAT authorities have rights to make enquires, inspect documents, and search and seize information when necessary. When conducting tax inspections in accordance with PRC laws and for providing assistance under Chinas exchange of information agreements, the SAT authorities have the right to require all units and individuals to disclose tax related information, regardless of a domestic tax interest. Chinas competent authority (the Director of the Global Co-operation 242. and Compliance Division of the International Taxation Department of the SAT), when requested by a foreign counterpart, can access information with
74 COMPLIANCE WITH THE STANDARDS: ACCESS TO INFORMATION

the assistance of the SAT officials at or below provincial level, which have the necessary powers to access information from taxpayers and third parties in China. The co-ordination procedures between Chinas competent authority and the SAT officials at or below provincial level are clearly defined and effective in practice. 243. No bank secrecy or other provisions in Chinas laws and regulations unduly prevent the competent authority from obtaining, directly or indirectly, account information maintained by banks or other financial institutions for tax purposes. Banks and other financial institutions are obliged to disclose relevant information upon request from the SAT authorities. 244. The volume of specific requests for exchange of information both to and from Chinas exchange of information partners has been increasing over the past several years. The requests vary in complexity and cover a wide range of material. Over the last three years, there have been no cases where China has not provided information requested by exchange of information partners due to difficulties in accessing requested information. 245. Rights and safeguards (e.g. notification, appeal rights) in China do not unduly prevent or delay effective exchange of information.
B.1. Competent Authoritys ability to obtain and provide information

Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information).
Bank, ownership, and identity information (ToR B.1.1) and accounting records (ToR B.1.2)
246. The SAT is responsible for the administration of Chinas taxes and consists of local state taxation bureaus (LSTBs) and local taxation bureaus (LTBs) at the provincial level. The LSTBs, LTBs and their local branches at various levels are responsible for the collection and administration of taxes in respect of the taxes they respectively manage. Tax branches are representative offices of the county offices and established on the basis of economic districts, administrative districts, or sectors. Generally, every SAT office at provincial level comprises the following bureaus: a Tax Investigation Bureau, a Collection Bureau, a Foreign Investment Tax Bureau, and/or an Import and Export Tax Administration Bureau. The SAT Headquarters conducts vertical leadership over the offices of the SAT with respect to organisation, size, personnel, and budgets, and assists local governments by way of dual leadership over the LTBs.
247. As at the end of 2011, there were approximately 700 000 tax officials serving in approximately 61 tax offices (or bureaus) at provincial level, 30 municipal tax offices (or bureaus) at vice-provincial level, 664 tax offices (or bureaus) at municipal level, 4 176 tax offices at county level, and more than 55 466 tax branches. Approximately 70% of the total tax officials are tax collectors. 248. The SAT and its authorised representatives, i.e. the Director General, the Deputy Director General of the International Taxation Department of the SAT and Director of the Global Co-operation and Compliance Division (GCCD) of the International Taxation Department of the SAT, are the competent authority under Chinas DTCs and TIEAs. Requests received by the Director General or the Deputy Director General of the International Taxation Department are forwarded to the GCCD. The officials in GCCD then examine the request to ensure that it meets the requirements provided by the respective exchange of information (EOI) agreement and that it provides sufficient information to action the request. The competent authority of the requesting jurisdiction is notified of any deficiencies concerning its request. If the request is valid, the GCCD will seal an official SAT Headquarters document to dispatch the request to provincial tax authorities where the taxpayer or third party possessing the information resides to make further investigations. 249. The LSTBs and LTBs have their own responsibilities in relation to EOI matters. Investigation and examinations for all EOI requests are handled by the lower working level tax authorities (LSTBs and LTBs). There is at least one specialist in each tax bureau at provincial level in charge of assisting the competent authority in carrying out investigations in each respective province. The procedures used to access information are generally the same for all types of information and categories of record keepers from which the information is to be obtained. The local tax authorities send a notice to the person or entity that has control of the information and request the information to be provided within a prescribed time limit, normally 7 to 30 days depending on the difficulty of access to information. If the information is already in the hands of the tax authorities, the requested information is normally sent to the competent authority of the requesting jurisdiction within 60 days. If another government department in China (e.g. the SAIC) maintains the information, the SAT sends a formal letter requesting information to be provided within 7 to 30 days, depending on the difficulty of access to information. The SAIC is obliged to co-operate with the SAT by providing all information maintained in its registries (e.g. registration information) to the SAT, both automatically and upon request. 33
33. See Notice on Business Registration and Tax Registration Information Exchange and Sharing by State Administration of Taxation and State Administration of Industry and Commerce [Guo Shui Fa [2003] No. 81.

250. When the requested information is received by the responsible local tax bureau, the information, together with a report, is submitted to each upper level tax bureau until it reaches the SAT Headquarters. Each level of tax bureau goes through the documents submitted to ensure that it contains the information requested in the request. At each step, if the reviewing official considers that the information collected is not sufficient, or where further research is necessary, the local tax bureau is required to take the necessary steps to deliver the additional information until it fully meets the requirements of the requesting party. After the GCCDs review, the information is sent to the competent authority for final approval.
Powers to obtain information

251. Chinas tax authorities have the necessary information gathering powers under the TCAL, the SAT Notice on Protocol for International Exchange of Tax Information (the SAT Protocol) (Guo Shui Fa [2006] No. 70), and its exchange of information agreements. The TCAL and the SAT Protocol provide the statutory authority for Chinas competent authority to exchange information for tax purposes with foreign jurisdictions pursuant to the provisions of a DTC or TIEA. 252. Article 57 of the TCAL provides that when conducting tax inspections in accordance with the law, the SAT authorities have the right to require units and individuals to disclose tax related information. Article 56 of the TCAL provides that all units and individuals are obliged co-operate with the SAT authorities when they conduct tax inspections in accordance with the law. 253. Article 54(2) of the TCAL provides that the SAT authorities are empowered to inspect a units or individuals commodities, goods or other properties at the units or individuals place(s) where production or business operations are conducted. Article 58 of the TCAL further provides that when investigating a tax case, the SAT authorities may record, tape-record, video tape, photograph and photocopy information relevant to the case. 254. The SAT Protocol, promulgated in 2006, provides detailed procedures and requirements relating to Chinas EOI program based on the OECD Manual for EOI. In particular, the SAT Protocol provides the procedures used by the SAT authorities from the date an EOI request is received to the date the information is provided to the requesting jurisdiction. 255. Article 10 of the SAT Protocol provides that under no circumstances can the SAT authorities at or below provincial level decline to supply information to the competent authority, nor shall the competent authority decline to supply information to the contracting parties solely because: it has no domestic interest in such information;
lack of reciprocity in the quantity and quality of the exchanged information ; tax authorities have secrecy obligations to taxpayers; banks have secrecy obligations to client information; or tax information is kept by an agent, intermediary organisation or a third party.
256. Article 142 of the General Principles of the Civil Law provides that, in case of inconsistency with domestic civil tax laws, Chinas bilateral treaties/agreements prevail over domestic civil laws. Further, Article 91 of the TCAL provides that Chinas international treaties/agreements prevail over domestic tax laws in case of inconsistency with domestic tax laws. Thus, the information exchange rules in Chinas DTCs and TIEAs override any inconsistent domestic tax laws or secrecy provisions. 257. Article 5 of the TCAL provides that all relevant PRC government departments and units must support and assist the SAT authorities when they carry out duties in accordance with the law. Article 6 of the TCAL further provides that individuals, withholding agents and other units concerned must truthfully report to the SAT authorities on matters concerning tax filing and payment, withholding tax and the collection of tax on behalf of the SAT authorities. 258. Chinas competent authority is able to respond to an EOI request that relates to information regarding a criminal tax matter in the requesting jurisdiction. Requests for information pertaining to a criminal tax matter in the requesting jurisdiction are treated seriously and other PRC government authorities (e.g. government security agencies) may be involved in case investigations, particularly when search and seizure is necessary.
Bank information
259. There are no limitations on the ability of Chinas tax authorities to obtain information held by a bank or other financial institution for either civil or criminal tax purposes in response to a specific exchange of information request. 260. Article 54(6) of the TCAL provides that the SAT authorities are empowered to investigate the deposit accounts opened by any unit, individual or withholding agent, upon the issuance of a national standard bank account investigation warrant. Article 87 of the TCALIR provides that the deposit account investigation warrant is produced by the tax bureau commissioner at county/district level or above. Consent of other authorities or regulatory bodies is not required. Warrants are typically produced on the same day they

are requested. There are no other special procedures used to access information held by banks or other financial institutions. There is also no need for court approval when officials from the SAT authorities request information from banks or other third party financial institutions. Article 17 of the TCAL expressly provides that banks and other financial institutions are obliged to assist the SAT authorities when investigation of units or individuals bank accounts is necessary. 261. There is no explicit requirement to specify particular details when making an EOI request for bank information to China. As a matter of practicality, however, sufficient details would need to be provided to enable the SAT authorities to action the request. The SAT reports that it is possible to action a request for bank information if the requesting jurisdiction provides a combination of information to specify the identity of the account holder (e.g. account number or similar identifying information). In rare occasions, providing only a name in Pinyin 34 will not be enough information as it may match multiple identities in China. It is not uncommon that more than one person bears the same name. For example, more than 100 000 people in China have the same name of Zhang Ming. Under these circumstances, China sends letters to its treaty partners requesting additional information to enable the competent authority to effectively process the requests. 262. The SAT authorities have a good relationship with financial institutions in China and report that banks are co-operative with regard to requests for information. There have been no cases where banks have refused to provide information to the tax authorities for EOI purposes. However, one of Chinas peers mentioned during the course of this review that in one specific case China was not in a position to provide the requested banking information.
Ownership and identity information and accounting records

263. There are no limitations on the ability of the tax authorities to obtain ownership and identity information and accounting records from taxpayers or third parties for civil or criminal tax purposes. There is no need for court approval when officials from the tax authorities request information from taxpayers or third parties. 264. Article 54(1) of the TCAL grants the SAT authorities the power to inspect a units or individuals accounting books, supporting vouchers, statements, and other relevant information. The SAT authorities can also inspect a withholding agents accounting books, supporting vouchers, or other
34. Pinyin is the official system to transcribe Chinese characters into Latin script used in China.
documentary evidence and relevant information in respect of the amount of taxes being withheld and remitted or collected and remitted. Article 86 of the TCALIR provides that when the SAT authorities exer265. cise their powers provided under the provisions of Article 54(1) of the TCAL, the tax authority is empowered to do so at the business premises of a unit, individual, or withholding agent. When deemed necessary and upon approval of the head of the tax bureau at district level or above, the SAT authority is entitled to take the units, individuals or withholding agents accounting books, supporting vouchers, financial statements and other relevant materials from previous years to the tax bureau office for examination. Upon the approval of the head of the tax bureau at city level or above, the SAT authority is empowered to take the taxpayer and withholding agents current years accounting information back to the tax bureau office for inspection purposes.
Use of information gathering measures absent domestic tax interest (ToR B.1.3)
266. The concept of domestic tax interest describes a situation where a contracting party can only provide information to another contracting party if it has an interest in the requested information for its own tax purposes. China has no domestic tax interest with respect to its information gathering powers. Information gathering powers provided to Chinas tax authorities under the TCAL can be used to provide EOI assistance regardless of whether China needs the information for its own domestic tax purposes (SAT Protocol Art. 10).
Compulsory powers (ToR B.1.4)

267. As previously described, the SAT authorities have the necessary powers to obtain information from natural and legal persons and have enforcement measures to compel the production of such information. Under the TCAL, the SAT authorities are entitled to inspect a units or individuals commodities, goods or other property at the units or individuals place(s) and to record, tape-record, video tape, photograph and photocopy information relevant to the case. Upon approval of the head of the tax bureau at district level or above, the SAT authority is entitled to take the units, individuals or withholding agents accounting books, supporting vouchers, financial statements and other relevant materials from previous years to the tax bureau office for examination. 268. Article 70 of TCAL further provides that if a taxpayer or withholding agent refuses to co-operate with or obstructs a tax inspection, the SAT authority is empowered to impose a fine not exceeding CNY 50 000 (EUR 5 896).

269. Article 73 of the TCAL provides that if a bank or other financial institution in which a taxpayer or withholding agent has opened an account, refuses: (i) to allow the SAT authorities to investigate the taxpayers or withholding agents deposit account, or (ii) refuses to act in accordance with the SAT authorities request to freeze the taxpayers or withholding agents deposits or withhold tax from the account, or (iii) after receiving a written notification from the SAT authorities, helps the taxpayer or withholding agent to transfer deposits and thereby causing a loss of tax revenue, the SAT authorities may impose a fine between CNY 100 000 (EUR 11 792) and CNY 500 000 (EUR 58 962), and impose a fine between CNY 1 000 (EUR 118) and CNY 10 000 (EUR 1 179) on the persons directly responsible.
Secrecy provisions (ToR B.1.5)

270. There are no provisions under Chinas laws relating to the secrecy of ownership, identity or accounting information. Article 54 of the TCAL and Article 10 of the SAT Protocol override confidentiality provisions applicable to banks and other financial institutions. 271. All of Chinas EOI agreements permit China to decline a request if responding to the request would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy. This follows the standards set forth in Article 26 of the OECD Model Tax Convention and the OECD Model TIEA. Information that falls within these categories remains protected under PRC domestic law and EOI requests for such information will generally be declined. 272. Among the situations in which China is not obliged to supply information in response to a request is when the requested information would disclose confidential information protected by attorney-client privilege. The concept of attorney-client privilege is not well defined under PRC law. The Lawyer Law and the PRC Code of Ethics for Attorneys both only provide that attorneys are obliged to keep confidential trade secrets obtained from their clients and the privacy of their clients. This obligation does not apply when the clients or other persons actions or plans are harmful to state security, public security or when personal and property safety of others may be seriously harmed. The limited scope of the attorney-client privilege does not exempt attorneys from being forced to disclose information in a judicial action (Civil Procedure Law Art. 70). In addition, PRC law does not protect any legal document or correspondence that is marked confidential and privileged. Moreover, the SAT authorities report that, in practice, an EOI request will not be declined because the information requested is maintained by an attorney. The SAT authorities can, with approval from the head of a tax
bureau at or above district/county level, compel the production of information from an attorney pursuant to their general access powers under the TCAL. 273. There are no cases, either domestic tax cases or for responding to EOI requests, where the attorney-client privilege prevented the SAT from accessing information. Input received from Chinas peers confirms this. There are no other professional privileges in China, for example relating to accountants or tax advisers, which may hinder these professionals providing information to government.
B.2. Notification requirements and rights and safeguards

The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information.
Not unduly prevent or delay exchange of information (ToR B.2.1)

274. The SAT authorities are not statutorily obliged to inform the person concerned of the existence of an EOI request. Likewise, the SAT authorities are not obliged to inform the taxpayer concerned prior to contacting third parties to obtain information. 275. Generally, taxpayers have no special rights to intervene against the SAT authorities information-gathering powers under the TCAL and the SAT Protocol. However, if a taxpayer considers any specific administrative action by the SAT authorities to infringe their legal rights, the taxpayer can file a tax administrative review petition with the SAT administrative reviewing authority (i.e. the tax bureau one level higher than the tax bureau that conducted the original action) (TCAL Art. 8). The scope of tax administrative review covers: tax collection actions, tax administrative permits and approvals, administration on invoices, tax guarantee measures and enforcement measures, tax administrative penalties, and others specific tax administrative actions. Taxpayers are obliged to provide any information requested by the SAT authorities before any decision can be made during the administrative review proceedings (Art. 88).

276. Although there have been no administrative review proceedings regarding the exercise of the SAT authorities information-gathering powers for EOI purposes, Chinas competent authority reports that, in practise, it will not respond to an EOI request until resolution of the administrative review proceedings. Typically, administrative review proceedings are completed within one month depending on the facts of the case. 277. The SAT authorities report that, to date, there have been no cases where taxpayers or third party record keepers refused to provide requested information in response to the tax authorities information-gathering powers under the TCAL.
COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION 83
C. Exchanging Information
Overview
278. Jurisdictions generally cannot exchange information for tax purposes unless they have a legal basis or mechanism for doing so. A jurisdictions practical capacity to effectively exchange information relies both on having adequate mechanisms in place as well as an adequate institutional framework. This section of the report assesses Chinas network of exchange of information agreements against the standards and the adequacy of its institutional framework to achieve effective exchange of information in practice. 279. China has a comprehensive network of bilateral agreements that provide for exchange of information in tax matters, and is currently engaged in negotiations to establish new agreements as well as renegotiations of its older agreements. Currently, China has a network of 97 DTCs, 95 of which are in force, and two agreements 35 containing information exchange requirements. In addition, China has entered into TIEAs with eight jurisdictions, seven of which are in force with Argentina, The Bahamas, the British Virgin Islands, Bermuda, the Cayman Islands, Guernsey, the Isle of Man, and Jersey. Chinas agreements cover its major trading partners and China has not refused to enter into an exchange of information agreement with any Global Forum member seeking to do so. The large majority of Chinas agreements meet the international standards. However, Chinas DTCs with Austria (1991), Brunei (2004), Estonia (1998), Jamaica (1996), Luxembourg (1994), Malaysia (1985), Switzerland (1990), and Trinidad and Tobago (2003) do not meet the standard because of limitations in place in the domestic laws of Chinas treaty partners. A protocol amending the DTC with Switzerland was initialled in March 2012. It is recommended that China continue its program of updating its exchange of information agreements to incorporate wording in line with Article 26 of the OECD Model Tax Convention.
35. With Hong Kong Special Administrative Region (Hong Kong SAR) and Macau Special Administrative Region (Macau SAR).
84 COMPLIANCE WITH THE STANDARDS: EXCHANGING INFORMATION

280. Chinas policy is to negotiate exchange of information agreements to the international standard. In particular, Chinas practice is to include an exchange of information article in conformity with the 2005 update of the OECD Model Tax Convention. Considering Chinas comprehensive treaty network, many of them do not contain the last version of Article 26 of the OECD Model Tax Convention. However, Chinas capacity to access a wide range of information (as detailed in section B.1. of this report), in particular bank information, without reference to a domestic tax interest ensures Chinas ability to exchange information in line with the international standard. All of Chinas TIEAs are based on and closely follow the OECD Model TIEA. 281. All exchange of information articles in Chinas agreements contain confidentiality provisions and Chinas domestic legislation also contains relevant confidentiality provisions. These provisions apply equally to all information and documentation forming the requests received by China as well as to responses received from counterparties. 282. Chinas agreements ensure that the contracting parties are not obliged to provide information which would disclose trade, business, industrial, commercial or professional secrets or information which is the subject of attorney client privilege or to make disclosures which would be contrary to public policy. Input received from Chinas peers indicates that in many cases China 283. is able to respond to requests for information within 90 days of receipt by providing the information requested or an update on the status of the request. Chinas domestic procedures for handling exchange of information requests are well defined and generally effective in practise. However, there are a small number of cases reported where Chinas competent authority did not provide the requesting jurisdiction with a status update when the request could not be responded to within 90 days. The Chinese authorities explained that failure to provide a status update in some cases was the result of insufficient personnel resources within the GCCD at the SAT Headquarters. In light of the growing number of inbound requests received by China, China should ensure that it has an appropriate number of staff working within the GCCD to ensure effective management of Chinas exchange of information requests. 284. In general, the responses to the peer questionnaire from Chinas exchange of information partners suggest that Chinas practices in terms of exchange of information are to a high standard. Information provided by peers shows that China is able to respond to the vast majority of requests it receives in a thorough and comprehensive manner.
C.1. Exchange-of-information mechanisms

Exchange of information mechanisms should allow for effective exchange of information.
Other forms of exchange of information

285. Beyond meeting the standard of effective exchange of information assistance in response to specific requests, China engages in exchange of information practices that go beyond the standard, including automatic and spontaneous exchanges of information. Input received from Chinas peers indicates that China actively exchanges information on a spontaneous and automatic basis. 286. Since 2004, China has been exchanging information on an automatic basis with several of its key treaty partners. The SAT sends out approximately 10 000 pieces of information through automatic exchange each year. The information generally covers certain types of payments, e.g. dividend, interest, royalty, salary, and pension payments. Each single piece of automatic information exchanged is manually translated from Chinese into English. 287. China has also developed a spontaneous exchange of information relationship with a number of treaty partners. The SAT sends out approximately 35 pieces of information through spontaneous exchange each year. 288. The processes and procedures applied to automatic and spontaneous exchanges follow the guidance under the SAT Protocol and the circular on EOI Directive Rules and are the same as applied to exchange of information on request. 289. Several of Chinas exchange of information partners provided positive feedback regarding Chinas spontaneous and automatic exchange of information practices. Chinas competent authority reports that some of its specific requests for exchange of information relate to information provided on a spontaneous or automatic basis.
Joint International Tax Shelter Information Centre

290. China actively participates in the Joint International Tax Shelter Information Centre (JITSIC). JITSIC was established in 2004 to supplement the ongoing work of its members in identifying and curbing tax avoidance and shelters and those who promote them and invest in them. 36 Delegates from each of the member jurisdictions are based in either Washington, DC or London and exchange information on abusive tax schemes, their promoters and investors, consistent with the provisions of bilateral tax conventions. 37
36. 37. JITSIC Memorandum of Understanding. JITSIC Terms of Reference.

Pursuant to the domestic procedures of the parties, the delegates of JITSIC from each respective member jurisdiction are delegated the ability to act as competent authorities for purposes of bilateral exchanges of information. 291. China joined JITSIC in September 2008 as an observer country by sending a delegate to the JITSIC London office for three months. China sent another delegate to the JITSIC London office in 2010. In 2010, China formally joined JITSIC and became JITSICs seventh member country, after Australia, Canada, Japan, the United Kingdom, the United States and Republic of Korea. 292. China currently has one delegate with competent authority status at the JITSIC London office. Chinas JITSIC delegate is primarily involved in: (i) identifying abusive tax avoidance schemes by regularly exchanging anonymous details of new schemes within the JITSIC framework, both bilaterally and multilaterally; (ii) carrying out case specific exchange of information on abusive tax avoidance schemes within Chinas current framework of its existing bilateral tax agreements; (iii) facilitating a platform for direct communications between experts and field auditors in home countries; and (iv) sharing the expertise, best practices and experience in tax administration to combat abusive tax schemes.
Tax examinations abroad

293. The TIEAs concluded by China include provisions that tax officials of a requesting jurisdiction can be present during examinations of taxpayers and third parties upon a requested jurisdictions consent. The SAT approved one incoming authorised visit from a treaty partner and is currently drafting its first internal directive on handling overseas audits.
Foreseeably relevant standard (ToR C.1.1)

294. The international standard for exchange of information envisages information exchange upon request to the widest possible extent. Nevertheless it does not allow fishing expeditions, i.e. speculative requests for information that have no apparent nexus to an open inquiry or investigation. The balance between these two competing considerations is captured in the standard of foreseeable relevance which is included in Article 26(1) of the OECD Model Tax Convention set out below: The competent authorities of the contracting states shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the contracting states, of their political subdivisions or local authorities, insofar as the taxation
thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2. 295. Chinas DTCs are generally patterned on the OECD Model Tax Convention and its commentary as regards the scope of information that can be exchanged. DTCs initially signed or amended by protocol after 2008 generally use the foreseeably relevant standard (Belgium (2009); the Czech Republic (2009); Finland (2010); Hong Kong, China (2010); Malta (2010); Singapore (2010); Syria (2010); Tajikistan (2008); Turkmenistan (2009); the United Kingdom (2011); Zambia (2010)). Older DTCs generally use the term as is necessary or as is relevant in lieu of as is foreseeably relevant. The terms as is necessary and as is relevant are recognised in the commentary to Article 26 of the OECD Model Tax Convention to allow for the same scope of exchange as does the term foreseeably relevant. 38 296. Chinas DTC with Switzerland (1990) incorporates additional language: such information (being information which is at their disposal under their respective taxation laws in the normal course of administration) as is necessary. This wording imposes a restriction on the partners ability to respond to a request as it may be interpreted in a restrictive manner. Furthermore, the scope of this treaty is limited to the application of the Convention. This treaty does not meet the standard. China and Switzerland initialled a protocol amending this DTC in March 2012. 297. All of Chinas TIEAs (with Argentina, Bahamas, Bermuda, British Virgin Islands, Cayman Islands Guernsey, the Isle of Man, Jersey) meet the foreseeably relevant standard as they are patterned on the OECD Model TIEA and its commentary regarding the scope of information that can be exchanged. 298. In cases where a request is unclear or incomplete, Chinas competent authority reports that it routinely seeks clarifying or additional information from the requesting jurisdiction before declining a request. Information received from partner jurisdictions with an exchange of information relationship with China confirms this.
In respect of all persons (ToR C.1.2)

299. For exchange of information to be effective, it is necessary that a jurisdictions obligation to provide information is not restricted by the residence or nationality of the person to whom the information relates or by the
38. The word necessary in Article 26(1) of the 2003 OECD Model Tax Convention was replaced by the phrase foreseeably relevant in the 2005 version. The commentary to Article 26 recognises that the term necessary allows for the same scope of exchange as does the term foreseeably relevant.

residence or nationality of the person in possession or control of the information requested. For this reason, the international standard for exchange of information envisages that exchange of information mechanisms will provide for exchange of information in respect of all persons. 300. All but one of Chinas DTCs and all of its TIEAs provide for exchange of information with respect to all persons. With the exception of Chinas DTC with Switzerland, none of Chinas agreements restricts the jurisdictional scope of the exchange of information provisions to certain persons, for example those considered resident in one of the contracting States. The China-Switzerland DTC limits the scope of exchange of information to residents of the contracting states.
Obligation to exchange all types of information (ToR C.1.3)

301. Jurisdictions cannot engage in effective exchange of information if they cannot exchange information held by financial institutions, nominees or persons acting in an agency or a fiduciary capacity. The OECD Model Tax Convention, which is an authoritative source of the standards, stipulates that bank secrecy cannot form the basis for declining a request to provide information and that a request for information cannot be declined solely because the information is held by nominees or persons acting in an agency or fiduciary capacity or because the information relates to an ownership interest. 302. Only Chinas DTCs signed or amended by protocol after 2008 include paragraph 26(5) of the OECD Model Tax Convention, which provides that a contracting state may not decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person (e.g. Barbados (2010); Belgium (2009); the Czech Republic (2009); Finland (2010); Hong Kong, China (2010); Malta (2010); Singapore (2010); Syria (2010); Tajikistan (2008); the United Kingdom (2011) and Zambia (2010)). Chinas policy is to include Article 26(5) in all of its new agreements. 303. Although Chinas other DTCs do not include such a provision, there are no limitations in Chinas laws with respect to access to bank information, information held by nominees, and ownership and identity information. There are, however, such limitations in place in the domestic laws of some of its treaty partners (e.g. Austria (1991), Estonia (1998), Luxembourg (1994), Malaysia (1985) and Switzerland (1990)). In these cases, the absence of a specific provision requiring exchange of bank information unlimited by bank secrecy may serve as a limitation on the exchange of information which can occur under the relevant DTC. It is recommended that China continue to renegotiate the DTCs with Austria, Estonia, Luxembourg, and Malaysia to include paragraph 26(5) of the OECD Model Tax Convention and bring these
EOI mechanisms to the international standard. A protocol updating the DTC with Switzerland was already concluded in March 2012. 304. All Chinas TIEAs include the provisions contained in Article 5(4) subparagraphs (a) and (b) of the OECD Model TIEA, obliging the contracting parties to exchange all types of information.
Absence of domestic tax interest (ToR C.1.4)

305. The concept of domestic tax interest describes a situation where a contracting party can only provide information to another contracting party if it has an interest in the requested information for its own tax purposes. An inability to provide information based on a domestic tax interest requirement is not consistent with the international standard. Contracting parties must use their information gathering measures even though invoked solely to obtain and provide information to the other contracting party. 306. Chinas DTCs with Barbados (2010); Belgium (2009); the Czech Republic (2009); Finland (2010); Hong Kong, China (2010); Malta(2010); Singapore (2010); Syria (2010); Tajikistan (2008); United Kingdom (2011) and Zambia (2010) incorporate wording in line with Article 26(4) of the OECD Model Tax Convention, obliging the contracting parties to use informationgathering measures to exchange requested information without regard to a domestic tax interest. Chinas other DTCs do not contain such a provision. There are, however, no domestic interest restrictions on Chinas powers to access information. China is able to exchange information, including in cases where the information is not publicly available or already in the possession of the governmental authorities as noted in section B.2 of this report. 307. There is a domestic tax interest requirement for some of Chinas treaty partners (Brunei (2004), Jamaica (1996), Trinidad and Tobago (2003)). In such cases, the absence of a specific provision requiring exchange of information unlimited by domestic tax interest will serve as a limitation on the exchange of information that can occur under the relevant DTC. It is recommended that China continue to renegotiate its DTCs with Brunei, Jamaica, and Trinidad and Tobago to include paragraph 26(4) of the OECD Model Tax Convention and to bring these EOI mechanisms to the international standard 308. All of Chinas TIEAs allow information to be obtained and exchanged notwithstanding it is not required for any domestic tax purpose.
Absence of dual criminality principles (ToR C.1.5)

309. The principle of dual criminality provides that assistance can only be provided if the conduct being investigated (and giving rise to an information request) would constitute a crime under the laws of the requested country if

it had occurred in the requested country. In order to be effective, exchange of information should not be constrained by the application of the dual criminality principle. There are no dual criminality requirements in Chinas agreements for 310. exchange of information in tax matters.
Exchange of information in both civil and criminal tax matters (ToR C.1.6)
311. Information exchange may be requested both for tax administration purposes and for tax prosecution purposes. The international standard is not limited to information exchange in criminal tax matters but extends to information requested for tax administration purposes (also referred to as civil tax matters). 312. All of Chinas exchange of information agreements provide for exchange of information in both civil and criminal tax matters. Chinas competent authority is able to respond to an EOI request that 313. relates to information regarding a criminal tax matter in the requesting jurisdiction. Chinas authorities reported that in practice requests for information pertaining to a criminal tax matter in the requesting jurisdiction are treated seriously and that there are no differences between civil and criminal tax matters in the manner the information relating to these cases will be collected and further exchanged by China.
Provide information in specific form requested (ToR C.1.7)

314. Exchange of information mechanisms should allow for the provision of information in the specific form requested (including depositions of witnesses and production of authenticated copies of original documents) to the extent possible under a jurisdictions domestic laws and practices. 315. There are no restrictions in the exchange of information provisions in Chinas DTCs and TIEAs that would prevent China from providing information in a specific form, as long as this is consistent with its own administrative practices. 316. Chinas competent authority is prepared to provide information in the specific form requested to the extent permitted under PRC law and administrative practice. Information received from partner jurisdictions with an exchange of information relationship with China indicates that China is able to respond to such requests.
In force (ToR C.1.8)

317. Exchange of information cannot take place unless a jurisdiction has exchange of information arrangements in force. Where exchange of information agreements have been signed the international standard requires that jurisdictions must take all steps necessary to bring them into force expeditiously. 318. China has a comprehensive network of 107 bilateral agreements that provide for exchange of information in tax matters, comprising 97 DTCs, 2 arrangements and 8 TIEAs. Ninety-five of Chinas DTCs, its two arrangements and seven TIEAs are in force. Chinas agreements with Belgium (new DTC), Ethiopia, the Cayman Islands, and Uganda are awaiting ratification. 319. It normally takes under 12 months for China to ratify a DTC or a TIEA. In fact, approximately 85% of Chinas agreements entered into force within 12 months of signing. For seventeen of Chinas agreements, it took more than 24 months before they entered into force. 39 From an update provided by China, it appears that 10 of these agreements were ratified by China within one year and three more within two years. In practice, a signed DTC or TIEA is submitted to the State Council via the Ministry of Foreign Affairs to be ratified. After the ratification, a note for entry into force will be sent to the contracting state through diplomatic channels. China dispatches its note indicating its completion of its internal procedures for the entry into force to its treaty partner who will acknowledge receipt of the notification and may confirm it has also completed its internal procedure for the same purpose. When China receives the second notification, the treaty (either DTC or TIEA) will be in force. 320. The SAT authorities report that in some instances ratification has been difficult when a TIEA is signed between China and a jurisdiction which is either a crown dependency or an overseas territory of a sovereign jurisdiction. There have been miscommunications with regard to the issue of entry into force. However, the SAT authorities report that all miscommunications have been rectified. Only one of Chinas recent TIEAs is pending ratification, that with the Cayman Islands, signed on 26 September 2011.
39.
Australia (26 months), Belarus (21 months), Belgium (29 months), Croatia (77 months), Greece (42 months), Hungary (31 months), Italy (50 months), Morocco (48 months), Nepal (117 months), Nigeria (84 months), Portugal (26 months), Qatar (92 months), Russia (35 months), Trinidad and Tobago (25 months), United States (31 months), Venezuela (45 months).
In effect (ToR C.1.9)

321. For exchange of information to be effective, the contracting parties must enact any legislation necessary to comply with the terms of the agreement. All of Chinas agreements which have been signed and concluded by 322. both parties are in effect in China. 323. As noted previously in this report, Chinas legal and regulatory framework is in place to ensure availability and access to information required for international tax matters. Treaties are given the full force and effect of law in China and must be faithfully observed. International agreements, such as DTCs and TIEAs override domestic laws in the case of conflict (TCAL Art. 91). As such, Chinas international agreements have been given effect to in its national legislation. Chinas competent authority has a developed institutional framework 324. that supports effective exchange of information. It has written administrative procedures to be followed by exchange of information staff for processing, co-ordinating, and responding to incoming requests. The SAT Protocol provides procedures for the co-ordination between the competent authority, Regional Taxation Bureaus, and Tax Offices. The guidelines establish a commitment by the tax authorities to provide exchange of information assistance in a timely manner. Agreements between Chinas SAT and other relevant PRC government agencies provide procedures for assistance in relation to exchanging information (e.g. Notice on Business Registration and Tax Registration Information Exchange and Sharing by State Administration of Taxation and State Administration of Industry and Commerce).
C.2. Exchange-of-information mechanisms with all relevant partners

The jurisdictions network of information exchange mechanisms should cover all relevant partners.
325. Ultimately, the international standard requires that jurisdictions exchange information with all relevant partners, meaning those partners who are
interested in entering into an information exchange arrangement. Agreements cannot be concluded only with counterparties without economic significance. If it appears that a jurisdiction is refusing to enter into agreements or negotiations with partners, in particular ones that have a reasonable expectation of requiring information from that jurisdiction in order to properly administer and enforce its tax laws it may indicate a lack of commitment to implement the standards. China has a comprehensive treaty network that covers all of its major 326. trading partners (European Union; United States; Japan; ASEAN 40 member states except Cambodia and Myanmar; Hong Kong, China; Republic of Korea; Australia; Russia; India. 41). China has signed exchange of information agreements with 33 of the 34 OECD 42 countries (not with Chile), all the G20 countries, and 63 of the 106 Global Forum members. 43 327. China has signed TIEAs with eight jurisdictions (Argentina, Bahamas, British Virgin Islands, Bermuda, Cayman Islands, Guernsey, Isle
40. 41. 42. The Association of Southeast Asian Nations (ASEAN) has 10 member states: Brunei, Cambodia, Indonesia, Lao P.D.R., Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam (See www.aseansec.org/). http://english.mofcom.gov.cn/static/column/statistic/ie.html/1. Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States. Argentina; Australia; Austria; Bahamas; Bahrain; Barbados; Belgium; Bermuda; Brazil; Brunei; Cayman Islands; Canada; Cyprus; Czech Republic; Denmark; Estonia; Finland; France; FYROM; Georgia; Germany; Greece; Guernsey; Hong Kong, China; Iceland; India; Indonesia; Ireland; Isle of Man; Israel; Italy; Jamaica; Japan; Jersey; Korea; Luxembourg; Macao, China; Malaysia; Malta; Mauritius; Mexico; the Netherlands; New Zealand; Nigeria; Norway; Philippines; Portugal; Qatar; Russia; Saudi Arabia; the Seychelles; Singapore; Slovak Republic; Slovenia; South Africa; Spain; Sweden; Switzerland; Trinidad and Tobago; Turkey; United Arab Emirates; United Kingdom. Regarding Cyprus note by Turkey: The information in this document with reference to Cyprus relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the Cyprus issue. Note by all the European Union Member States of the OECD and the European Commission: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
43.

of Man, Jersey) and has established a detailed agenda of negotiation for additional exchange of information agreements. In addition, seven existing DTCs will be renegotiated. In all cases, China expects that the outcome in terms of exchange of information provisions will be to the international standard. There is no indication that China has not entered into an agreement with a jurisdiction when requested to do so.
Phase 1 determination The element is in place. Factors underlying recommendations Recommendations China should continue to develop its exchange of information network with all relevant partners. Phase 2 rating Compliant.
C.3. Confidentiality
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received.
Information received: disclosure, use, and safeguards (ToR C.3.1)

328. Governments would not engage in information exchange without the assurance that the information provided would only be used for the purposes permitted under the exchange mechanism and that its confidentiality would be preserved. Information exchange instruments must therefore contain confidentiality provisions that spell out specifically to whom the information can be disclosed and the purposes for which the information can be used. In addition to the protections afforded by the confidentiality provisions of information exchange instruments, jurisdictions with tax systems generally impose strict confidentiality requirements on information collected for tax purposes. 329. All exchange of information articles in Chinas DTCs have confidentiality provisions modelled on Article 26(2) of the OECD Model Tax Convention. Likewise, all of Chinas TIEAs have confidentiality provisions modelled on Article 8 of the OECD Model TIEA. Chinas DTCs and TIEAs override domestic PRC law in case of inconsistency (TCAL Art. 91).
330. The confidentiality provisions in Chinas DTCs and TIEAs are backed by general confidentiality provisions in Chinas domestic legislation. Article 8 of the TCAL imposes an obligation on Chinas tax authorities to maintain strict confidentiality in respect of any information obtained through their work. Article 87 provides that if any tax information is divulged due to any violation of the confidentiality provisions under the TCAL, the responsible personnel will be punished according to the relevant administrative laws, and may be liable to up to 7 years imprisonment if such violation constitutes a crime. Tax information under exchange of information is governed by the Law on Guarding State Secrets, the State Administration for Protection of State Secrets on the Confidentiality Administration of Carriers of State Secrets, and other relevant laws and regulations. According to the Law on Guarding State Secrets, any tax authority who violates the confidentially provisions under the TCAL is subject to a fine between CNY 1 000 (EUR 118) and CNY 5 000 (EUR 590). In addition, the SAT authorities will circulate an internal notice of warning naming the tax authority that divulged such information to raise awareness of the importance of confidentiality. 331. The SAT Protocol provides specific rules for safeguarding the confidentiality of information for exchange of information purposes during the collection, storage, transmittal, and use of information. The detailed safeguards are as follows (Arts.15 30): information being exchanged is treated as a national secret and is protected under the Law on Guarding State Secrets; the information received must be handled as confidential documents in conformity with the procedures provided by relevant domestic law (e.g. TCAL); only authorised officials can access the information and these officials must have taken training courses on confidentiality; tax authorities are not allowed to disclose information received to irrelevant persons or departments unless the competent authority approves such disclosure; no taxation authority at any level may disclose the source and contents of the tax information in any public taxation document; and information being exchanged must be transmitted through the National Secret Channel, including an independent mailing system and phone system;
332. In each tax bureau of the SAT (61 across Chinas territory), there is at least one computer used exclusively for dealing with exchange of information requests in order to ensure the confidentiality of all information received and provided. In addition all information related to exchange of information

requests is packed and sealed for transmission and delivered according to the relevant confidentiality provisions (i.e. through the National Secret Channel). In packing and sealing tax information, a confidential seal is affixed on the envelope and the serial number and names of the receiving and dispatching units are indicated.
All other information exchanged (ToR C.3.2)

333. The confidentiality provisions in Chinas exchange of information agreements and domestic law do not draw a distinction between information received in response to requests or information forming part of the requests themselves. As such, these provisions apply equally to all requests for such information, background documents to such requests, and any other document reflecting such information, including communications between the requesting and requested jurisdictions and communications within the tax authorities of either jurisdiction.
C.4. Rights and safeguards of taxpayers and third parties

The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties.
Exceptions to requirement to provide information (ToR C.4.1)

334. Each of Chinas exchange of information agreements ensures that the parties are not obliged to provide information which would disclose any trade, business, industrial, commercial or professional secret or information which is the subject of attorney client privilege or information the disclosure of which would be contrary to public policy. 335. As noted in section B.1 of this report, Chinas domestic law permits the disclosure of information to the extent that it is required to be disclosed by a DTC or TIEA. Chinas DTCs and TIEAs specifically provide that trade, business, industrial, commercial or professional secrets are not required to be disclosed. Similarly, they do not require the disclosure of information that would be contrary to public policy. Therefore, information that falls into
these categories remains protected under Chinas domestic laws and requests for such information are declined. As noted previously in section B.1, legal professional privilege does not prevent the access to information by Chinese authorities.
C.5. Timeliness of responses to requests for information

The jurisdiction should provide information under its network of agreements in a timely manner.
Responses within 90 days (ToR C.5.1)

336. In order for exchange of information to be effective, it needs to be provided in a timeframe, which allows tax authorities to apply the information to the relevant cases. If a response is provided after a significant lapse of time the information may no longer be of use to the requesting authorities. This is particularly important in the context of international co-operation as cases in this area must be of sufficient importance to warrant making a request. 337. There are no provisions in Chinas laws or in its DTCs pertaining to the timeliness of responses or the timeframe within which responses should be provided. Chinas TIEAs include an obligation to either respond to the request, or provide a status update within 90 days of receipt of the request. As such, there appear to be no legal restrictions on the ability of Chinas competent authority to respond to requests within 90 days of receipt by providing the information requested or by providing an update on the status of the request. 338. China receives a relatively high volume of requests for information. Over the last three years, China received around 300 inbound requests a year: 296 in 2009, 221 in 2010 and 345 in 2011, and the SAT expects the number of inbound requests to continue to grow in future years. Information received from partner jurisdictions with an exchange of information relationship with China indicates that 85% of the requests are answered in 90 days. In the majority of other cases, Chinas competent authority provides a status

update, within 90 days. In a few cases China responds to requests within 180 days. Only in exceptionally rare cases does China respond within one year. China gives priority to urgent requests and requests relating to criminal tax matters in the requesting jurisdiction. Requests that cannot be fulfilled within 90 days typically relate to requests that involve a large number of taxpayers who are geographically dispersed in different provinces, cities, or districts in the country. Notwithstanding, the SAT authorities report that any delay is not the result of any particular type of information requested or the particular investigative measures used to access information.
Monitoring and reporting

339. Chinas competent authority uses measures to internally monitor its exchange of information program. The GCCD maintains a national database of all requests and correspondence classified by the name of the EOI partners. The national database is an application that allows for statistics generation and facilitates tracking and review. All local tax authorities (LSTBs and LTBs) are also obliged to establish similar recording systems at the local level. To ensure every request is responded to in a timely manner, the GCCD closely monitors each case and progress is tracked and updated in the national database. The GCCD will request follow-up reports from the relevant local tax bureaus in cases where a request is long outstanding. This system appears to be working efficiently. 340. In order to monitor Chinas EOI program and evaluate the performance of all tax authorities at the provincial level that have participated in EOI, the SAT issues an annual EOI report, in which the following indicators are assessed: number of requests (including statistics by EOI partners and by provincial tax authorities); length of time for providing a response (the SAT requires provincial tax authorities to finish investigations within 40 to 60 days, depending on the circumstances of each case, any delay by local tax authorities will be addressed in the report); quality of requests and replies (according to the DTC, TIEA, as well as the OECD standard); and application of domestic procedures in collecting information.
341. Chinas competent authority has procedures to produce a status report or an interim report for requests that take longer than 90 days to provide a response. However, this process is monitored manually and it may, in some cases not be entirely accurate. Nevertheless, the competent authority is in the process of updating its system to allow for automatic status reporting.
342. When the responsible local tax bureau obtains requested information, the information, together with a report, is submitted to each higher level of tax bureau until it reaches the competent authority at the SAT Headquarters. In each step, if the reviewing official believes that the information collected is not sufficient, or further audit is necessary, the information is returned to the local responsible tax bureau for further collection or audit until it fully meets the requirements of the requesting jurisdiction. 343. Chinas competent authority has periodical meetings with jurisdictions with which it has a significant EOI relationship or has strong mutual economic ties in order to update the status of requests, as well as to exchange views pertaining to matters of interest for both jurisdictions regarding EOI. For example, the competent authority reports that the tax attach of the United States in Beijing has made frequent visits to the SAT to discuss the practical operation of the EOI article under the existing United States China DTC. In addition, the SAT has meetings with officials from Japan on EOI topics two or three times each year.
Organisational process and resources (ToR C.5.2)

344. Chinas legal and regulatory framework relevant to exchange of information for tax purposes is presided over by the SAT. The GCCD is delegated authority to act as competent authority under Chinas EOI agreements. Chinas competent authority is clearly identifiable to its exchange of information partners. The competent authoritys name and address is listed on the SATs website in English, and additional information can be found on the website in Chinese (www.chinatax.gov.cn). 345. The GCCD is based in Beijing and is comprised of a specialised team of three experts in international taxation. The GCCD oversees all EOI matters in China. In addition, for each level of tax authorities, there are designated specialists working exclusively or concurrently on EOI matters. All EOI personnel are obliged to have bachelors degree or above in related fields, as well as more than five years experience in international taxation. 346. All staff engaged in EOI matters receive training specific to EOI issues in order to provide quality service to Chinas EOI partners. The training is specifically designed to cover essential topics in EOI, including obligations under EOI mechanisms, internal processing of requests and confidentiality obligations. One of the most significant training programs is the Seminar on EOI under the OECD Outreach Program, which is held once a year with approximately 100 staff participating. In addition, there are several other seminars held each year in China on selective EOI topics (e.g. international practice in EOI and case studies). According to the statistics provided

by Chinas tax authorities, approximately 450 tax officials received EOI training in the past three years. In 2006, the SAT published a comprehensive circular on EOI directive 347. rules, namely the SAT Protocol, which provides procedures and requirements for all categories of Chinas EOI program. The SAT Protocol is based on the OECD Manual on Information Exchange. In particular, the SAT Protocol sets forth the procedures used from the date an EOI request is received to the date that the information is provided to the requesting jurisdiction. The SAT also released a circular on EOI Model Templates in order to provide additional guidance for EOI requests and replies. The model templates explain the specific requirements on how to prepare a valid request and response and also provides templates for EOI documents and correspondence, including cover letter, memorandum, acknowledgement, etc. 348. When a request is received by the Director General or the Deputy Director General of International Taxation Department, the request is sent directly to the GCCD. The experts in the GCCD then examine the request to ensure that the request is in line with the respective DTC or TIEA between China and the requesting jurisdiction. If a request is deficient in any respect, the competent authority of the requesting jurisdiction will be notified. Chinas competent authority never simply declines an invalid request without asking for clarification or additional information from the requesting jurisdiction. If a request is identified as valid, the GCCD will immediately seal an official SAT Headquarters document to dispatch it to the relevant provincial tax authorities to make further investigations. 349. As described in section B of this report, the tax administration system in China is divided into five levels from the Central Government at the top level to the local tax authorities at the lower working levels, all of which have their own responsibilities in relation to EOI matters. Investigation and examinations for all EOI requests are handled by the lower working level tax authorities and reported to each upper level. The specialists in each tax bureau at the provincial level have been trained especially for the purpose of assisting Chinas competent authority to complete investigations in their respective provinces. There is adequate financial and technical support at the provincial level dedicated to providing EOI assistance. For example, there is at least one computer exclusively used for dealing with EOI requests in each tax bureau in order to ensure the confidentiality of all information received and provided. 350. The three international tax specialists in the GCCD, who work exclusively for matters concerning EOI in China, are facing challenges posed by the gradual increase in the number of inbound requests. From 2009 to 2010, the number of inbound requests received by China increased by approximately 100. The SAT authorities report that they expect the number
of inbound requests to continue to grow in future years. Under staffing of the GCCD may result in longer response times, especially if large quantities of requests are received in a short time. The SAT authorities report, however, that they are currently considered adding additional personnel in the GCCD. 351. Overall, China has dedicated appropriate financial and technical resources to the various areas of EOI regime. However, considering the increasing volume of inbound requests China receives, it is recommended that China devote additional personnel resources to the GCCD to ensure effective management of Chinas EOI program. Notwithstanding, all competent authority staff maintain high professional standards and have adequate expertise and training specific to EOI.
Absence of restrictive conditions on exchange of information (ToR C.5.3)

352. There are no laws or regulatory practices in China that impose unreasonable, disproportionate, or unduly restrictive conditions on exchange of information.
Phase 1 determination This element involves issues of practice that are assessed in the Phase 2 review. Accordingly no Phase 1 determination has been made. Phase 2 rating Compliant. Factors underlying recommendations Chinas EOI program is, in practice, managed by three officials in the GCCD who face personnel resource challenges posed by the gradual increase in the number of inbound requests received by China. Recommendations China should devote additional personnel resources to the GCCD to ensure effective management of Chinas EOI program.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 103
Summary of Determinations and Factors Underlying Recommendations

Factors underlying recommendations
Determination
Recommendations
Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities (ToR A.1) Phase 1 determination: The element is in place. Not all of the regions in China have implemented legal provisions that ensure ownership information in relation to bearer shares is available. All of the regions in China should implement provisions ensuring the availability of ownership information in relation to bearer shares.
Phase 2 rating: Compliant. Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements (ToR A.2) Phase 1 determination: The element is in place. Phase 2 rating: Compliant.
104 SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS

Determination Phase 1 determination: The element is in place. Phase 2 rating: Compliant.
Recommendations
Banking information should be available for all account-holders (ToR A.3)
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information) (ToR B.1) Phase 1 determination: The element is in place. Phase 2 rating: Compliant. The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information (ToR B.2) Phase 1 determination: The element is in place. Phase 2 rating: Compliant. Exchange of information mechanisms should allow for effective exchange of information (ToR C.1) Phase 1 determination: The element is in place. Phase 2 rating: Compliant. The jurisdictions network of information exchange mechanisms should cover all relevant partners (ToR C.2) Phase 1 determination: The element is in place. Phase 2 rating: Compliant. China should continue to develop its exchange of information network with all relevant partners.
SUMMARY OF DETERMINATIONS AND FACTORS UNDERLYING RECOMMENDATIONS 105
Determination
Recommendations
The jurisdictions mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received(ToR C.3) Phase 1 determination: The element is in place. Phase 2 rating: Compliant. The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties (ToR C.4) Phase 1 determination: The element is in place. Phase 2 rating: Compliant. The jurisdiction should provide information under its network of agreements in a timely manner (ToR C.5) This element involves issues of practice that are assessed in the Phase 2 review. Accordingly no Phase 1 determination has been made. Phase 2 rating: Compliant. Chinas EOI program is, in practice, managed by three officials in the GCCD who face personnel resource challenges posed by the gradual increase in the number of inbound requests received by China. China should devote additional personnel resources to the GCCD to ensure effective management of Chinas EOI program.
ANNEXES 107
Annex 1: Jurisdictions Response to the Review Report 44

China would like to record its heartfelt appreciation again for the hard work done by the Secretariat, the assessment team, the team of experts and all PRG members in the whole peer review and rating process of the country. China is satisfied with the result of the rating and will continue to join hands with all Global Forum members and other relevant jurisdictions to promote the high standard of transparency and exchange of information for tax purposes worldwide.
44.
This Annex presents the Jurisdictions response to the review report and shall not be deemed to represent the Global Forums views.
108 ANNEXES
Annex 2: List of All Exchange-of-Information Mechanisms in Force
No. 1
Jurisdiction Albania
Type of EOI Agreement Double Tax Convention (DTC) DTC Tax Information Exchange Agreement (TIEA) DTC DTC DTC DTC TIEA DTC DTC DTC DTC Protocol DTC DTC New DTC TIEA DTC DTC
Date Signed 13 Sep 2004
Date in force 28 Jul 2005
2 3
Algeria Argentina
06 Nov 2006 13 Dec 2010
27 Jul 2007 16 Sep 2011
4 5 6 7 8 9 10 11 12 13 14 15 16
Armenia Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Bermuda Bosnia and Herzegovina* Brazil
05 May 1996 17 Nov 1988 10 Apr 1991 17 Mar 2005 01 Dec 2009 16 May 2002 12 Sep 1996 15 May 2000 10 Feb 2010 17 Jan 1995 18 Apr 1985 07 Oct 2009 02 Dec 2010 02 Dec 1988 05 Aug 1991
28 Nov 1996 28 Dec 1990 01 Nov 1992 17 Aug 2005 28 Aug 2010 08 Aug 2002 10 Apr 1997 27 Oct 2000 09 Jun 2010 03 Oct 1996 10 Sep 1987 --31 Dec 2011 16 Dec 1989 06 Jan 1993
ANNEXES 109
No. 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34
Jurisdiction British Virgin Islands Brunei Bulgaria Canada (negotiating new) Cayman Islands Croatia Cuba Cyprus
45
Type of EOI Agreement TIEA DTC DTC DTC TIEA DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC
Date Signed 07 Dec 2009 21 Sep 2004 06 Nov 1989 12 May 1986 26 Sep 2011 9 Jan 1995 13 Apr 2001 25 Oct 1990 28 Aug 2009 26 Mar 1986 13 Aug 1997 12 May 1998 14 May 2009 25 May 2010 30 May 1984 09 Jun 1997 22 Jun 2005 10 Jun 1985
Date in force 30 Dec 2010 29 Dec 2006 25 May 1990 29 Dec 1986 --18 May 2001 17 Oct 2003 05 Oct 1991 04 May 2011 22 Oct 1986 24 Mar 1999 08 Jan 1999 --25 Nov 2010 21 Feb 1985 29 Nov 1997 10 Nov 2005 14 May 1986
Czech Republic Denmark (negotiating new) Egypt Estonia Ethiopia Finland France (negotiating new) FYROM46 Georgia Germany (negotiating new)
45.
1. Footnote by Turkey: The information in this document with reference to Cyprus relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the Cyprus issue. 2. Footnote by all the European Union Member States of the OECD and the European Commission: The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
46.
Former Yugoslav Republic of Macedonia.
110 ANNEXES
Type of EOI Agreement DTC TIEA DTC DTC Protocol DTC Protocol 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 Hungary Iceland India Indonesia Iran Ireland Isle of Man Israel Italy Jamaica Japan Jersey Kazakhstan Korea Kuwait Kyrgyzstan Laos Latvia Lithuania Luxembourg Macao, China DTC DTC DTC DTC DTC DTC TIEA DTC DTC DTC DTC TIEA DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC Protocol DTC Protocol 59 60 61 Malaysia Malta Mauritius DTC New DTC DTC DTC Protocol
No. 35 36 37
Jurisdiction Greece Guernsey Hong Kong, China
Date Signed 03 Jun 2002 27 Oct 2010 21 Aug 2006 30 Jan 2008 27 May 2010 17 Jun 1992 03 Jun 1996 18 Jul 1994 07 Nov 2001 20 Apr 2002 19 Apr 2000 26 Oct 2010 08 Apr 1995 31 Oct 1986 03 Jun 1996 06 Sep 1983 29 Oct 2010 12 Sep 2001 28 Mar 1994 25 Dec 1989 24 Jun 2002 25 Jan 1999 07 Jun 1996 03 Jun 1996 12 Mar 1994 27 Dec 2003 15 Jul 2009 26 Apr 2011 23 Nov 1985 23 Oct 2010 01 Aug 1994 05 Sep 2006
Date in force 11 Nov 2005 17 Aug 2011 08 Dec 2006 11 Jun 2008 20 Dec 2010 31 Dec 1994 05 Feb 1997 19 Nov 1994 25 Aug 2003 14 Aug 2003 29 Dec 2000 14 Aug 2011 22 Dec 1995 13 Dec 1989 15 Mar 1997 26 Jun 1984 10 Nov 2011 27 Jul 2003 27 Sep 1994 20 Jul 1990 29 Mar 2003 22 Jun 1999 27 Jan 1997 18 Oct 1996 28 Jul 1995 30 Dec 2003 15 Sep 2010 08 Oct 2011 14 Sep 1986 25 Aug 2011 04 May 1995 25 Jan 2007
ANNEXES 111
No. 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83
Jurisdiction Mexico Moldova Mongolia Morocco Nepal Netherlands New Zealand Nigeria Norway Oman Pakistan Papua New Guinea Philippines Poland Portugal Qatar Romania Russia Saudi Arabia Serbia ** Seychelles Singapore
Type of EOI Agreement DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC Protocol DTC Protocol
Date Signed 12 Sep 2005 07 Jun 2000 26 Aug 1991 27 Aug 2002 14 May 2001 13 May 1987 16 Sep 1986 15 Apr 2002 25 Feb 1986 25 Mar 2002 15 Nov 1989 14 Jul 1994 18 Nov 1999 07 Jun 1988 21 Apr 1998 02 Apr 2001 16 Jan 1991 27 May 1994 23 Jan 2006 21 Mar 1997 26 Aug 1999 11 Jul 2007 24 Aug 2009 23 Jul 2010 11 Jun 1987 13 Feb 1995 25 Apr 2000 22 Nov 1990 11 Aug 2003 30 May 1997 16 May 1986 06 July 1990 31 Oct 2010
Date in force 01 Mar 2006 26 May 2001 23 Jun 1992 16 Aug 2006 31 Dec 2010 05 Mar 1988 17 Dec 1986 21 Mar 2009 21 Dec 1986 20 Jul 2002 27 Dec 1989 16 Aug 1995 23 Mar 2001 07 Jan 1989 07 Jun 2000 21 Oct 2008 05 Mar 1992 10 Apr 1997 01 Sep 2006 01 Jan 1998 12 Dec 1999 18 Sep 2007 11 Dec 2009 22 Oct 2010 23 Dec 1987 27 Dec 1995 07 Jan 2001 20 May 1992 22 May 2005 09 Feb 1999 03 Jan 1987 27 Sep 1991 01 Sep 2011
84 85 86 87 88 89 90 91 92
Slovak Republic Slovenia South Africa Spain Sri Lanka Sudan Sweden Switzerland Syria
DTC DTC DTC DTC DTC DTC DTC DTC DTC
112 ANNEXES
Type of EOI Agreement DTC DTC DTC DTC DTC DTC DTC DTC DTC DTC New DTC DTC DTC DTC DTC DTC
No. 93 94 95 96 97 98 99
Jurisdiction Tajikistan Thailand Trinidad And Tobago Tunisia Turkey Turkmenistan Uganda
Date Signed 27 Aug 2008 27 Oct 1986 18 Sep 2003 16 Apr 2002 23 May 1995 13 Dec 2009 11 Jan 2012 04 Dec 1995 01 Jul 1993 26 Jul 1984 27 Jun 2011 30 Apr 1984 03 Jul 1996 17 Apr 2001 17 May 1995 26 Jul 2010
Date in force 28 Mar 2009 29 Dec 1986 22 May 2005 23 Sep 2003 20 Jan 1997 30 May 2010 --18 Oct 1996 14 Jul 1994 23 Dec 1984 --21 Nov 1986 03 Jul 1996 23 Dec 2004 18 Oct 1996 30 Jun 2011
100 Ukraine 101 United Arab Emirates United Kingdom 102 103 United States 104 Uzbekistan 105 Venezuela 106 Vietnam 107 Zambia
* China continues to apply the provision of the treaty with the former Yugoslavia for its relationships with Bosnia and Herzegovina. ** Serbia and Montenegro ceased to exist on 5 June 2006. Serbia is the legal successor of the state union of Serbia and Montenegro. This treaty was concluded by the former Yugoslavia and continued to apply in relations between Serbia and Montenegro and China. This treaty remains applicable in relations between Serbia and China. Montenegro has declared that it will honour all tax treaties that applied with respect to Serbia and Montenegro. However, application of the treaty with Montenegro has to be confirmed by China.
ANNEXES 113
Annex 3: List of all Laws, Regulations and Other Relevant Material

Accounting
Accounting Law of the Peoples Republic of China (Order of the President of the Peoples Republic of China [1999] No. 24) Circular of the Ministry of Finance and the State Archives Administration Regarding the Release of the Procedures for the Administration of Accounting Archives (Cai Kuai Zi [1998] No. 32) Circular of the Ministry of Finance on Printing and Distributing the Accounting System for Non-governmental Non-profit Organizations (Cai Kuai [2004] No. 7) Financial Rules for Financial Enterprises (Order of the Ministry of Finance [2006] No. 42)
Anti-money laundering
Anti-Money Laundering Law of the Peoples Republic of China (Order of the President of the Peoples Republic of China [2006] No. 56) Rules for Anti-money Laundering by Financial Institutions (Order of the Peoples Bank of China [2006] No. 1)
Company Law
Company Law of the Peoples Republic of China (Order of the President [2005] No. 42) Company Law of the Peoples Republic of China (1993 Version) Regulations of the Peoples Republic of China on the Administration of Company Registration (Amended in 2005) (Order of the State Council [2005] No. 451)
114 ANNEXES
Wholly Foreign-owned Enterprise Law of the Peoples Republic of China (2000 Revision) Detailed Implementing Rules for the Law of the Peoples Republic of China on Wholly Foreign-owned Enterprises (Revised) (Order of State Council [2001] No. 301) Detailed Implementation Rules for the Administrative Regulations of the Peoples Republic of China on the Registration of Enterprise Legal Persons Sino-foreign Equity Joint Venture Law (2001 Revision) (Order of the President [2001] No. 48) Sino-Foreign Co-operative Joint Venture Law of the Peoples Republic of China (Order of the President [2000] No. 40) Circular of the State Administration for Industry and Commerce, the Ministry of Commerce, the General Administration of Customs and the State Administration of Foreign Exchange on the Issue of the Implementing Opinion on Several Issues Concerning the Application of Law in the Administration of the Examination, Approval and Registration of Foreign-invested Companies (Gong Shang Wai Qi Zi [2006] No. 81) Administrative Measures for the Registration of Enterprises of Foreign Countries (Regions) Engaged in Production and Business Activities within the Territory of China (Order of the State Administration for Industry and Commerce [1992] No. 10) Provisions of the Supreme Peoples Court about Several Issues on the Application of the Company Law of the Peoples Republic of China (i) (Fa Shi [2006] No. 3) Circular of the Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce on Printing and Issuing Several Provisions for the Alteration of Investors Equities in Foreign Investment Enterprises (Wai Jing Mao Fa [1997] No. 267)
Constitution/Legislation/Court
The Constitution of the Peoples Republic of China (Amended 2004) Legislation Law of the Peoples Republic of China (Order of the President [2000] No. 31)
ANNEXES 115
Organic Law of the Peoples Courts of the Peoples Republic of China (Revised in 2006) (Order of the President of the Peoples Republic of China No. 59) General Principles of Civil Law of the Peoples Republic of China (Order of the President [1986] No. 43) Criminal Law of the Peoples Republic of China (1997 Version) (Order of the President [1997] No. 83) Civil Procedure Law of the Peoples Republic of China (Revised in 2007) (Order of the President of the Peoples Republic of China [2007] No. 75) Several Provisions of the Supreme Peoples Court on Evidence in Civil Proceedings Administrative Litigation Law of the Peoples Republic of China Interpretations of the Supreme Court on Certain Issues Concerning the Application of the Administrative Procedure Law of the Peoples Republic of China
Financial industry
Regulation of Deposit Saving Administration (Order of the State Council [1992] No. 107) Peoples Bank of China Law of the Peoples Republic of China (2003 amendment) (Order of the President [2003] No. 12) Law of the Peoples Republic of China on Commercial Banks (Revised in 2003) (Order of the Present [2003] No. 13) Administrative Measures for Identifying the Financial Institutions Clients and Preserving Their Identity Information and Transaction Records (Joint Order of the Peoples Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission [2007] No. 2) Implementing Measures of China Banking Regulatory Commission for Administrative Licensing Matters Concerning Chinese-funded Commercial Banks (Revised 2006) (Order of China Banking Regulatory Commission [2006] No. 7)
116 ANNEXES
Order of the China Banking Regulatory Commission on the Release of the Measures for the Administration of Financial License Control (Order of the China Banking Regulatory Commission [2003] No. 2) Administrative Rules for the Reporting by Financial Institutions of Large-value and Suspicious Transactions (Order of the Peoples Bank of China [2006] No. 2) Measures for the Administration of Financial Institutions Reports on Suspicious Financing Transactions for Terrorist-related Activities (Order of the Peoples Bank of China [2007] No. 1)
Foreign exchange
Foreign Exchange Administrative Regulations of the Peoples Republic of China (2008 Revision) (Order of the State Council No. 532) Circular on Certain Issues Relating to Strengthening the Administration of Capital Account Foreign Exchange Business (Hui Fa [1998] No. 21)
Foundation
Regulation on the Administration of Foundation (Order of the State Council [2004] No. 400) Measures for Annual Inspection of Foundations (Order of the Ministry of Civil Affairs [2005] No. 30) Measures for the Information Disclosure of Foundations (Order of the Ministry of Civil Affairs [2006] No. 31)
Fund
Law of the Peoples Republic of China on Securities Investment Fund (Order of the President of the Peoples Republic of China [2003] No. 9) Measures for the Administration of Securities Investment Fund Management Companies (Order of the China Securities Regulatory Commission [2004] No. 22)
ANNEXES 117
Individual income tax

Circular of Civil Aviation Administration on the Issuance of the Measures (Trial) on Individual Income Tax (IIT) Self Declaration (Guo Shui Fa [2006] No. 162) Circular of the Ministry of Finance and the State Administration of Taxation on Printing and Distributing the Provisions on the Collection of Individual Income Tax on Investors of Individual Proprietorship and Partnership Enterprises (Cai Shui [2000] No. 91) Individual Income Tax Law of the Peoples Republic of China (2011 Revision) (Order of the President of the Peoples Republic of China No. 48) Regulations for the Implementation of the Individual Income Tax Law of the Peoples Republic of China (2011 Revision)
Insurance law
Insurance Law of the Peoples Republic of China (Amended) (Order of the President of the Peoples Republic of China No. 11)
Miscellaneous
Lawyer Law of the Peoples Republic of China (2007 Amendment) (Order of the President [2007] No. 76) Code of Ethics for Lawyers
Partnership
Partnership Enterprise Law of the Peoples Republic of China (2006 Amendment) (Order of the President of the Peoples Republic of China [2006] No. 55) Decision of the State Council on Revising the Administrative Measures of the Peoples Republic of China for the Registration of Partnership Enterprises (Order of State Council No. 497) The Regulations on the Administration of Registration of Partnership Businesses (1997) (The order of the State Council No. 236)
118 ANNEXES
Administrative Measures on the Establishment of Partnership Enterprises in China by Foreign Enterprises or Individuals (Order of the State Council of the Peoples Republic of China No. 567) Circular of the Ministry of Finance and the State Administration of Taxation on Issues Concerning the Income Tax Levied on Partners of a Partnership Enterprise (Cai Shui [2008] No. 159)
SAIC Measures for the Annual Inspection of Enterprises

Measures for the Annual Inspection of Enterprises (Order of the State Administration for Industry and Commerce [2006] No. 23)
Securities
Securities Law of the Peoples Republic of China (Order of the President of the Peoples Republic of China No. 43) Measures for the Administration of Securities Registration and Settlement (2009 Revision) (Order of the China Securities Regulatory Commission No. 65)
Tax
Law of The Peoples Republic of China Concerning the Tax Administration and Tax Collection (Decree of the President [2001] No. 49) Detailed Rules for the Implementation of the Law of the Peoples Republic of China on Tax Administration and Collection (Order of the State Council [2002] No. 362) Procedures for the Administration of Tax Registration (Order of the State Administration of Taxation [2003] No. 7) The Law of the Peoples Republic of China on Enterprise Income Tax (Order of the President [2007] No. 63) The Circular of the State Administration of Taxation Regarding the Issuance of the Interim Procedures for the Administration of Source Withholding for Non-Resident Enterprise Income Tax (Guo Shui Fa [2009] No. 3)
ANNEXES 119
Provisional Measures for Tax Administration on Contracting Engineering Operation and Providing Labour Services of Non-residents (Order of the State Administration of Taxation [2009] No. 19) Circular on Printing and Distributing the Tentative Administrative Measures on Tax Convention Treatments for Non-Residents (Guo Shui Fa [2009] No. 124) The Release of Regulations on the Implementation of Enterprise Income Tax Law of the Peoples Republic of China by the State Council (Order of the State Council [2007] No. 512) Circular of the State Administration of Taxation on Issues Concerning the Identification of China-controlled Overseas-registered Enterprises as Resident Enterprises on the Basis of the Standard of Actual Management Organization (Guo Shui Fa [2009] No. 82) Circular on Issues Concerning Tax Credit for Enterprises Overseas Income (Cai Shui [2009] No. 125) Announcement on Promulgating the Operating Guidelines on Tax Credit for Enterprise Offshore Income (Announcement of the State Administration of Taxation [2010] No. 1) Circular of the State Administration of Taxation on Issues Concerning the Identification of China-controlled Overseas-registered Enterprises as Resident Enterprises on the Basis of the Standard of Actual Management Organization (Guo Shui Fa [2009] No. 82) Working Regulations for the International Exchange of Tax Intelligence (State Administration of Taxation June 12, 2006)
Trust
Trust Law of the Peoples Republic of China (Order of the President of the Peoples Republic of China [2001] No. 50) Procedures on the Administration of Trust Companies (Order of the China Banking Regulatory Commission [2007] No. 2) Circular of the Ministry of Finance on Printing and Issuing the Accounting Rules of Trust Business (Cai Kuai [2005] No. 1) Circular of the China Banking Regulatory Commission and the State Administration of Foreign Exchange on the Issues Concerning Promulgation of the Tentative Measures for Administration of Commissioned Overseas Wealth Management Business Undertaken by Trust Companies (Yi Jian Fa [2007] No. 27)
120 ANNEXES
Annex 4: People Interviewed During On-Site Visit

Banking Regulatory Commission Guangdong Local Taxation Bureau Jiangsu Municipal Office of the State Administration of Taxation Ministry of Commerce Ministry of Justice Ministry of Finance Ministry of Public Security Peoples Bank of China Securities Depository and Clearing Corporation Limited Securities Regulatory Commission Shanghai Trust Registration Centre State Administration for Industry and Commerce State Administration of Taxation State Counsel Legislative Affairs Office The National Peoples Congress of the Peoples Republic of China
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GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE OF INFORMATION FOR TAX PURPOSES

Peer Review Report Combined: Phase 1 + Phase 2, incorporating Phase 2 ratings

ISBN 978-92-64-20555-0 (print) ISBN 978-92-64-20556-7 (PDF)

Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda.

ABOUT THE GLOBAL FORUM 5

About the Global Forum

Information and methodology used for the peer review of China 5

General information on legal system and the taxation system

10. 11. 12.

The tax system

International exchange of information for tax purposes

Overview of the financial sector and relevant professions

See further: www.csrc.gov.cn/pub/csrc_en/about/.

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 23

Compliance with the Standards

24 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 25

A.1. Ownership and identity information

26 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Companies (ToR 18 A.1.1) Types of companies

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 27

28 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 29

30 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Ownership information kept by companies

Tax registration with the State Administration of Taxation (SAT)

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 31

Foreign exchange registration with the Administration of Foreign Exchange

32 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Ownership information on foreign companies 21 Business registration with the SAIC

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 33

Tax registration with SAT

Ownership information held by service providers

34 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 35

36 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Ownership information held by nominees

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 37

38 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Bearer shares (ToR A.1.2)

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 39

40 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Registration of listed securities

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 41

Registration of non-listed securities

42 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Partnerships (ToR A.1.3) Types of partnerships

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 43

Ownership information on partnerships Business registration with the SAIC

44 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Tax registration with the SAT

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 45

Information held by service providers

Information held by the partnership or partners

Trusts (ToR A.1.4) Types of trusts

46 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 47

Registration requirements for trusts

48 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 49

Ownership information held by trustees and trust service providers

50 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Foundations (ToR A.1.5) Types of foundations

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 51

Registration with the Ministry of Civil Affairs (MCA)

52 COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION

Tax registration with the SAT

COMPLIANCE WITH THE STANDARDS: AVAILABILITY OF INFORMATION 53