China Taxation Conference 2023:
Navigating the intricacies of China tax

Sarah Chan

The archived version of this year’s China Taxation Conference featured presentations and discussions on the changing dynamics of the business and tax environment in the Mainland

The China Taxation Conference, organized by the Institute, is a highly anticipated annual event for tax practitioners with an interest in the relevant developments in the Mainland. Around 2,500 members enrolled in the live and archived versions of the 2022 conference. This year’s conference, held as a live webinar, attracted over 400 members and featured a series of presentations and discussions on the changing dynamics of the business and tax environment in the Mainland.

A panel discussion was held at the end of the conference, featuring Winnie Shek, Tax Partner of Deloitte China; Joanna Ip, Director, Tax and Business Advisory Services at PwC Hong Kong; Jane Hui, member of the Institute’s Taxation Faculty China Tax Support Group (TFCTSG), and Partner, International Tax and Transaction Services/Leader of China Tax Centre at Ernst & Young Tax Services Limited; and William Chan, member of the TFCTSG, and Partner, Grant Thornton Tax Services. The discussion was moderated by Travis Lee, Convenor of TFCTSG, and Tax Partner of KPMG China.

Kicking off the discussion, Lee pointed out that, while there weren’t any drastic changes in terms of policy, there has been great change in terms of industry development and the economic situation, which has led to changes in tax administration, as well as more tax planning.

When asked about his views on the current incentive measures across the Greater Bay Area (GBA), Chan said that businesses should familiarize themselves with the variations in taxation incentives across different GBA cities in order to find the optimal destination for their investments. At the same time, he cautioned that businesses are required to have operations and staff in addition to their registered business to take advantage of these policies, which adds to the complexities and considerations.

Hui also reiterated the need to understand the different policies implemented across Mainland China, and offered the practical advice that businesses that plan to benefit from the various rebates and subsidies should obtain written confirmation from local government. She explained that yearly reviews are possible and the preferential tax policies may change from year to year. For merger and acquisitions, in particular, Hui suggested that the relevant financial planning should not rely on these rebates and returns. She also advised businesses to take into consideration that staff being relocated may prefer one city to another due to the varying personal income tax incentives, and that this may ultimately affect their manpower allocation.

Shek reminded businesses of the importance of follow-up management, sharing her observations that authorities may require corporations that have enjoyed exemptions in the past to provide detailed business records after the fact. She also warned about the varying interpretations as to whether particular subsidies should be subject to value-added tax (VAT).

On the topic of VAT in the Mainland, Ip spoke about the exemptions from VAT for small-scale taxpayers, meaning those with a monthly sales amount of 100,000 yuan or less, as well as the VAT credit refund, which she pointed out is likely to have a broader effect. For corporations considering applying for the VAT credit refund, Ip observed that tax authorities were taking a very cautious approach. She reminded corporations applying for the refund to conduct a thorough self-assessment, to ensure that they have being compliant with requirements and have the proper documentation, in order to avoid ending up being levied additional taxes instead.

Besides the various tax support policies to stimulate the economy, and new trends in tax administration, the discussion also covered the different challenges and opportunities for taxpayers in traditional and emerging industries in Mainland China.

About the archived webinar

The archived version of this year’s China Taxation Conference has now been made available for those who missed the live event.

The conference includes presentations from officials from the Guangdong Provincial Tax Services, State Taxation Administration introducing the different preferential tax policies under the Hengqin and Nansha Master Plans, which is followed by presentations from Hui, Shek and Ip on different aspects of tax and business in the Mainland China. The final part of the event includes the panel discussion and a Q&A session.

The presentations and discussions are informative and engaging, and the insights shared by the industry experts will be invaluable to those doing business or planning to expand their operations in the Mainland.

Sarah Chan is Chair of the Institute’s Taxation Faculty Executive Committee, Member of the Taxation Faculty China Tax Support Group, and Partner, Tax and Business Advisory Services, Deloitte China. She has more than 25 years of tax and business advisory experience. Having previously worked in China and the United States, Chan has extensive experience in advising multinational corporations on structuring transactions, business reorganization, operational remodelling, crossborder financing and exploring investment options and exit plans.

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