Seeing the tax trees from the data forest – managing tax administration in the digital age
China’s multi-year tax administrative modernisation programme is leveraging big data technology and a restructured tax authority for effective enforcement. Tracey Zhang, Fang Wei, Lilly Li and Anthony Chau explain how this increased collection efficacy is transitioning the tax administration to a more mature and reasonable approach to dealing with the ever more complex commercial issues.
In last year's seventh edition of China Looking Ahead, in the tax transformation chapter, Adding wings to a tiger: data in tax enforcement in China, we looked in detail at both advances in tax administration being made at governmental level in China, and at the parallel improvements being made in tax management controls and practices at taxpayer level. In this year's eighth edition, in view of the very important changes made during the year in the structure and organisation of Chinese tax administration, in this chapter, we focus on the governmental developments.
Specifically, we look at key developments in 2018 under the following five themes:
The merger of the thousands of local tax bureaus (LTBs) and state tax bureaus (STBs), which previously existed in parallel in each individual tax district within China;
The abolition of tax 'pre-approval' and 'recordal' requirements, and tax documentation clarifications, provided as part of China's transition to a more self-assessment-based tax system;
Risk-based tax enforcement progress, with the rollout of the thousand enterprises initiative;
Consolidated business registrations and new inter-agency collaboration agreements, facilitating information sharing and enforcement; and
Online tax filing and digital tax invoicing enhancements.
Overall, we have observed that in China's advanced first-tier cities, such as Beijing, Shanghai and Shenzhen, the tax authorities have increased their enforcement effectiveness (e.g. data-driven tax enquiries/audits, taxpayer credit rating, etc.). At the same time, greater experience and training for tax officials have helped them to gain a better understanding of increasingly complex taxpayer commercial arrangements. These developments appear to have facilitated, in an increasing number of cases, a more reasonable approach by tax officials to dealing with taxpayer issues. China's tax law and formal guidance frequently leave many grey areas, and there is increasing positive experience of tax officials in these cities taking a more holistic view, and applying the law in a manner more sensitive to commercial realities and in line with original tax policy intent.
This is mirrored in the messaging adopted in public communications by the State Administration of Taxation (SAT) and provincial tax bureaus (e.g. through their website postings and WeChat news feeds), which in recent times have increasingly emphasised the concrete actions being taken to improve taxpayer services and support. It is hoped that this positive development continues, even if the economy slows in coming years and fiscal revenue raising becomes more challenging. It is also hoped that as data-driven tax enforcement approaches, and enhanced tax authority administrative structures and training, are rolled out to smaller, lower-tier cities, the positive trend towards greater commercial sensitivity is also reflected in their local tax enforcement practices. In this regard, it must be said that there is a complex interplay of these trends with the enhanced tax authority internal controls. The tightened controls have the good intention of limiting wilful non-application of tax law and SAT guidance, but may have made it harder for officials unfamiliar with commercially complex arrangements to apply tax rules in a commercially sensitive manner. Often, a 'face value' application of the rules is considered a personally safer approach for such officials. With such directionally different trends in play, it remains to be seen how tax administration practices evolve in future years.
Merger of the LTBs and STBs
Historically, China's tax administration and collection was conducted by thousands of tax offices, organised at province, prefecture, county and township levels (with slightly altered terminology for the different levels of tax authorities within major urban areas). At each level there were parallel LTBs, reporting to the local government at that level and collecting local taxes for local needs, and STBs, which collected the central government taxes and fell under the SAT. The complexities of the historic dual system created many challenges for taxpayers.
However, following a central government reform plan outlined in March 2018, from July 2018, LTBs were merged into STBs at each of these levels, resulting in a single tax authority hierarchy under the SAT, but which will involve some input from local governments. As a further step, the central government has also transferred responsibility for collecting employer and employee social security contributions (including housing fund contributions) to the tax authorities. These were previously administered by a variety of other government bodies, including the administrations for social welfare funds.
These reforms have a number of profound implications:
Before these reforms, different government agencies dealt with different taxes and contributions, such as corporate income tax (CIT) (generally STB), individual income tax (IIT) (generally LTB), and social security (social welfare administration). With all impositions now falling under the SAT-led tax administration, this allows for more integrated and effective enforcement. For example, employee wages subject to IIT and social security contributions and availing of CIT deductions cannot be filed and paid inconsistently, as sometimes happened in the past. In particular, there used to be very poor enforcement of social security contributions in relation to small businesses; this is anticipated to change substantially going forward. This enforcement modernisation also complements the new IIT Law's modernisation of personal income taxation, as outlined in the chapter, One giant step forward in Chinese IIT reform.
Improvements in taxpayer services, and reductions in taxpayer compliance costs, are also expected to arise from the STB-LTB merger. The SAT, in public pronouncements, has been referring to the merger as a key step in its Fang-Guan-Fu multi-year tax administrative upgrade programme, translated as one service standard, one administrative procedure, and one rule for law enforcement. Earlier tax administrative upgrade programmes, such as the spring breeze project and the blueprint for deepening the reform of collection and administrative systems of state and local tax administrations had, among other changes, directly required STBs and LTBs to set up common tax service halls and digital platforms. The STB-LTB merger clearly pushes this process further along, and should save taxpayers on having to shuttle between the different locations of LTB and STB tax offices within a tax district to deal with tax payments and recordals.
The merger also facilitates the implementation of one-stop shop processing of all tax-related matters, which the SAT had already set out as an objective in 2017. The goal is that taxpayers can choose at will the location to complete tax-related matters, with progressive expansion of the scope of the arrangement from (i) handling tax matters concerning all tax districts in a given city at any tax office in that city, to (ii) handling tax matters concerning all tax districts in a given province at any tax office in that province, to (iii) handling tax matters, relating to any tax district within China at a national level, at any tax district within China. This is to be facilitated by the country-wide integration of online tax service platforms, culminating in a nationwide e-tax bureau by 2020, as underpinned by a national data sharing exchange platform.
As detailed further in the chapter, Now that we have data, what are we going to do? – New challenges and opportunities in TP in China, the STB-LTB merger results in larger combined resources being at the disposal of the tax authorities. Cities such as Beijing and Shenzhen have already set-up new investigation bureaus focusing on special tax investigations, with expanded headcount levels well beyond those seen before the merger. Jiangsu province is also rolling out a similar bureau with an estimated headcount of more than 100 officers.
It might be noted that, as promising as these developments sound, there still are a lot of practical issues in relation to cross-tax district coordination and tax revenue allocation that remain to be resolved. For example, where taxpayers can elect with which tax authorities they wish to make filings and pay tax, issues arise concerning the allocation and transfer of tax revenues between tax authorities of payment, and those which might have a claim on the tax revenues as being the location in which income is sourced, or in which the taxpayer is registered (i.e. the responsible tax authority). In the absence of mechanisms for intra-authority tax revenue transfers, this can complicate taxpayer relationships with these tax authorities, who may demand tax payment 'on the double'. Such issues already arise in the cases where taxpayers can elect with which tax authorities they wish to pay and file, e.g. non-resident companies with operations in several tax districts in China.
Issues also arise due to the unique way in which China interlinks administrative approvals, recordals and processes from several government agencies. A foreign company disposing of equity in a Beijing company to a Shanghai company may find that, if they pay tax on the disposal gain to the Beijing tax authority (i.e. the source of the gain), the Shanghai purchaser is unable to process the consideration payment through a Shanghai bank. The bank may have no record of the tax being paid, as only Shanghai tax authority tax payments enter their reference system, and under foreign exchange authority rules, they may not be able to process the payment. Resolving the appropriate tax payment arrangements may require intensive discussions between the Beijing and Shanghai tax authorities, as well as the taxpayer.
As such, while the STB-LTB merger, and national taxpayer data integration arrangements, are promising, many more issues in relation to cross-tax district coordination and tax revenue allocation need to be resolved to ensure a genuinely improved taxpayer experience.
Abolition of tax pre-approval and recordal requirements, and tax documentation clarifications
In the past, China's tax administration relied heavily on 'pre-approvals' to control taxpayer behaviour and compliance. A very wide range of tax treatments, including tax incentives and restructuring reliefs, but also extending to more basic matters, such as recognition of asset disposal losses, required tax authority pre-approval. Furthermore, making various business-related payments out of China required tax authority pre-approval; banks would not process remittances unless a tax authority approval form was presented.
In the period 2013 to 2016, however, the SAT abolished practically all of these pre-approvals. These were substituted with recordals, filed with the tax authorities to enable follow-up procedures, but which should not, in principle, hold up the adoption of tax treatments or the processing of payments. Just seven matters were retained as pre-approval items, relating to minor administrative matters, such extensions of tax payment or filing deadlines (i.e. administrative licensing), and provision was made for these to be handled online.
This being said, many tax authorities across China continued, in certain cases, to treat the recordal process in the same manner as the previous pre-approval process. For example, SAT Announcement  No. 40 had abolished the pre-approval for various payments (e.g. services, and licence fees) out of China and replaced it with recordals. However, the tax authorities in many locations refused to stamp the recordal forms to confirm their receipt before the taxpayer agreed the tax payable with the authorities. As such, lacking the stamped recordal form, it would not be possible to process the remittance with the banks. In addition, many authorities required extensive documentation to be filed with the recordal.
As part of a broad programme of reducing enterprise compliance burdens, but also going some way to addressing such issues, in April 2018 the SAT issued Announcement 23  abolishing the recordal requirement for certain CIT preferential items. This included items such as tax exemptions, tax basis deductions, super deductions, accelerated depreciation, tax credits, and tax rate reductions. In its place, a new simplified method is used, starting with the 2017 CIT annual filing (from May 2018). Changes made by the announcement aim to:
Simplify procedures for claiming CIT benefits: Under the new simplified method to access CIT preferential treatments, taxpayers can determine for themselves whether they qualify for the CIT preferential treatment, and declare the CIT incentives they have enjoyed in the CIT annual filing. The taxpayers are required to maintain supporting documents in case of future audits;
Classify supporting documents as 'principal' or 'other' documents: Taxpayers are required to collect and maintain on file the tax relief supporting documents, listed as 'principal documents' in the new 2017 list of CIT preferential items (set out in Announcement 23). Documents listed as 'other documents', by contrast, do not need to be maintained on file, but may need to be resourced by the taxpayer if and when the authorities request them in clarification of uncertain matters; and
Focus on follow-up administration: Under Announcement 23, taxpayers in the software and integrated circuit (IC) sectors, who have claimed CIT benefits, must submit their principal supporting documents to the authorities before the deadline of the CIT annual filing (i.e. May 31). For other taxpayers, the follow-up tax administration requirements will be set out by their provincial tax authorities. Tax authorities will strengthen their follow-up administration.
Going forward, the intent is that tax deduction/exemption/incentive treatments provided for under the tax law will simply be adopted by taxpayers in their tax filings, based on their own assessment and evaluation. These can be audited and adjusted by the tax authorities at a later time if claimed inappropriately. These changes are allied to a nationwide campaign to remove excessive administrative discretion from local officialdom and may be viewed as allied to the government's anti-corruption campaign.
The Announcement 23 changes were accompanied by two further measures intended to bolster the transition to CIT self-assessment:
The April 2018-issued SAT Announcement  No. 15 simplifies the CIT declaration of asset losses. While the pre-approval of asset losses had earlier been transitioned to a recordal, this still required the provision of extensive supporting documentation. Under the new rules, a taxpayer is only required to submit a form, which accompanies the CIT annual filing, declaring the asset losses; supporting documents, such as accounting and tax-related materials can simply be kept on file with the taxpayer, to present in case of audit; and
The June 2018-issued SAT Announcement  No. 28 fills a major gap in the administrative framework to support the transition to a self-assessment system by setting out formally, for the first time, the supporting document requirements for CIT deduction purposes. Previously, China had no specific rules to regulate which supporting documents responsible tax authorities could demand. While there are certain relevant stipulations in the Tax Collection and Administration (TCA) Law, and the Administrative Measures for Invoices, and their implementation rules, many disputes over what constituted adequate documentation arose between tax authorities and taxpayers in practice. As such, the new guidance aims to increase certainty for enterprises.
Whether these fundamental changes to the operation of the Chinese tax system will benefit or hinder taxpayers is a matter of some debate, and will clearly depend on the circumstances of individual taxpayers. It might be noted that while the old pre-approval system could lead to extensive hold-ups, as taxpayers sought to persuade tax officials of the merits of their case, and could be seen as giving somewhat too much discretion to tax officials, there were advantages. Taxpayers, having received tax authority pre-approvals, could be reasonably sure that the tax position adopted would not be overturned during a later tax audit, assuming the officials who granted the approval remained in place. In addition, it should also be noted that, in each case where pre-approvals have been abolished, substantially more detailed filing forms and documentation are being requested from taxpayers to feed tax authority 'follow-up' procedures.
With the moves towards self-assessment, it is ever-more crucial that:
Tax certainty can be obtained through clarity in the law;
SAT procedures are sufficiently detailed and actually followed by tax authorities in practice; and
The risk of taxpayer internal error can be managed through tax risk management (TRM) systems and protocols.
The new system may bring benefits where, for a particular tax issue:
The SAT guidance is very clear and specific with little room for local interpretative discretion;
The SAT procedural guidance on filings in relation to the relief/deduction, and procedures for administrative review up to the SAT are highly specified and effective in practice; and
The TRM systems and procedures of the taxpayer are sufficient to pick up and deal with risk areas.
Where any of these aspects are lacking, then the new system may simply heighten taxpayer tax risk, outweighing any potential benefits. In addition, it might be noted that new complexities have arisen with the rollout of better internal controls within the tax authority infrastructure, overseeing and verifying that lower-tier tax authorities do not act in an arbitrary manner, which diverges from the law and SAT guidance. Being under the scrutiny of such internal monitoring mechanisms, there is a tendency by some officials (particularly in some lower-tier tax authorities) to limit their personal exposure by taking a very conservative approach to the application of tax rules. Particularly where they lack familiarity with complex commercial arrangements, they may be reluctant to use their discretion to apply the rules outside the strict wording of the law and SAT guidance. This can result in commercially problematic applications of tax rules. Such outcomes might be seen to run counter to the more commercially-sensitive and reasonable application of the rules in grey area cases in the most advanced cities. As such, this is a key challenge for the future in the transition to a more self-assessment based China tax system.
It might also be noted that interrelated aspects of Chinese governmental administration, beyond tax, also need to change in line with these tax administrative changes. As highlighted in the example given above, on the disposal of equity in a Beijing company to a Shanghai company by a foreign company, to the extent that banks and other parts of Chinese governmental and financial administration continue to use tax recordals as key documents in their processes, then the abolition of tax recordals raises questions of how these procedures will be adapted. Time lags in adaptation can lead to complexity and road blocks for basic business activities.
Risk-based tax enforcement steps up – the thousand enterprises initiative
Since 2015, the SAT has been working on the thousand enterprises initiative (TEI initiative), whereby a more data-driven, risk-based, approach to tax administration is adopted for the largest enterprises in China. Work up to now has been focusing on data collection, industry tree construction, and so on. The SAT is conscious that many businesses just view TEI in terms of endless data demands and want to see benefits, and so, Deputy Director of the SAT Large Enterprise Department (LED) Wang Fukai's list of TEI next steps is directed at bringing those benefits, for example, consistent nationwide tax treatment across local tax authorities, advance resolution of tax issues on complex matters, and so on.
On November 24 2017 Wang, provided details of the latest TEI plans:
The LED has started to perform a tax risk analysis for each TEI-covered group enterprise and their member enterprises. Based on the analysis, the identified tax risks of each member enterprise will be sent to local tax bureaus, via the Golden Tax III system, for further consideration and action. This will improve overall tax administration efficiency by providing better support for taxpayers who are proactive in tax risk management, as well as by helping tax officers to screen audit targets and risk areas.
In collaboration with provincial-level tax authorities, the fifth branch of the Beijing State Tax Bureau has been assigned to support the SAT to work on the analysis of the TEI information.
In the past two years, the LED has set up a risk indicator system and completed its upgrade from version 1.0 to 3.0. The key features of version 3.0 include:
Use of accounting indicators to measure enterprise operation status;
Use of tax collection indicators to monitor enterprise tax compliance performance; and
Use of industry indicators to identify enterprise tax risks.
The SAT is looking to set up a communication mechanism to tackle inconsistency issues arising from the diverse application of individual tax policies by different local authorities. Under this mechanism, the SAT will communicate with the headquarters of the involved group enterprise to reach an agreement on the tax treatment of an issue before it is sent to local tax authorities for resolution.
Tax risk analysis on TEI-covered enterprises focuses on completed transactions, rather than transactions which are still in progress. However, the SAT may conduct tax risk analysis for an enterprise on its in-progress and more complex transactions (such as mergers and acquisitions transactions) upon receipt of relevant information and data. The identified tax risks will be alerted to the enterprise to ensure that tax filing for the transaction is accurately performed. This may reduce the enterprise's risk of late payment surcharges and penalties.
With such developments in progress, the TEI initiative is set to become a far more important component of Chinese tax administration, both in terms of effective targeting and in audit, and in terms of resolving the types of tax uncertainties inherent in the design and implementation of Chinese tax law.
Consolidated business registrations and information sharing among government agencies
There has been a continuing programme, undertaken over several years, to simplify and consolidate the various business licences, registrations and permits which new enterprises in China must obtain. This falls under the 'five licences into one, one licence one code' programme, which has been rolled out on a nationwide basis since October 1 2016. This followed on from the initial 'three licences into one' reform in 2015, and the later 'five licences into one' reform in 2016. A new phase commenced in October 2017, when the State Council directed a large number of government agencies to take measures in the context of a new 'multiple licences into one' reform.
To this end, in March 2018, a '24 licences into one' programme was outlined for national implementation from June 2018, under Gong Shang Qi Zhu Zi  No. 31 (Circular 31). The 24 licences, which may all be obtained simultaneously on business registration, include:
Business licence (issued in the past by the administration of industry and commerce);
Tax registration (issued by the local and state tax offices);
Organisation code (issued by quality supervision, inspection and quarantine offices);
Social insurance registration (issued by HR and social security offices);
Statistics registration licence (issued by statistics bureaus);
Recordal for a branch's business licence (issued in the past by the administration of industry and commerce);
Certification for enterprises subject to inspection and quarantine for imports into and exports from China (issued by local entry-exit inspection and quarantine bureaus);
Recordal for carving of official seal (completed with local MPS offices);
Recordal for international freight forwarding agencies (completed with local commercial administrations);
Recordals for FIEs (completed with local commercial administrations);
Registration certificate for an enterprise engaged in customs declaration (issued by local customs offices);
Recordal for an enterprise, and its branches, engaged in assets valuation (completed with local MOF); and
Recordal for companies engaged in labour outsourcing, where setting up branches (completed with HR and social security offices).
The consolidation of these licences allows for enhanced information sharing between different government agencies. This sits alongside numerous other initiatives to pool, together with tax information, data from Customs, Ministry of Commerce (MOFCOM), Ministry of Finance (MOF), State Administration of Industry and Commerce (SAIC), public security bureaus, social welfare authorities and other bodies. Initially, in previous years, inter-departmental information sharing arrangements, some at a national level and others at provincial level, were set up on a rather ad hoc basis. A progressively more structured approach then emerged in recent years following the establishment of an overall framework in the September 2016-issued State Council Circular Guo Fa  No. 51. The SAT has set up tax-related information sharing mechanisms with 14 government agencies, recent examples of which include:
The April 2017-established cooperative framework agreement on information sharing and joint supervision between the General Administration of Customs (GAC), SAT and the State Administration of Foreign Exchange (SAFE). This framework underpins new mechanisms for information sharing, mutual recognition of supervision among the three authorities, mutual assistance of enforcement among the three authorities, as well as coordinated implementation of customs, tax, and forex rules in an efficient manner.
The January 2018-issued Gong Shang Qi Zhu Zi  No. 11 (Circular 11) between the SAIC and SAT. Following the merger of SAIC with several other government agencies earlier this year, to form the State Administration for Market Regulation (SAMR), the latter will take this forward. Under this arrangement, there will be enhanced SAMR-SAT information sharing and joint supervision activities.
For example, if an enterprise intends to de-register, it must announce this via the national credit record information sharing platform for the 45 days before de-registration. The SAMR must 'push' such information to the tax authorities, via the provincial-level information sharing platform, within one working day of the announcement being made. For a taxpayer who still has outstanding tax matters, the tax authority will raise an objection to deregistration to SAMR and its subordinate bodies. Circular 11 also clarifies that SAMR and SAT will establish a collaborative mechanism to oversee the obtaining of VAT invoices, and will carry out joint supervision on 'blacklisted' enterprises as a result of breaching tax laws and regulations.
As a next step, the government information systems of each central government agency, including the tax authorities, will all be connected to the national data sharing exchange platform, bringing data-driven enforcement effectiveness to the next level. This data pooled, from across government agencies, sits alongside the increased volume of multi-sourced data being tapped into by the tax authorities for big data analytics-driven tax administration.
As was explained in the 2017 edition of China Looking Ahead, in the chapter, Adding wings to a tiger: Data in tax enforcement in China, the tax authorities have made considerable efforts to pool tax information from across the Golden Tax III System, and plan to merge this with data from financial institutions (once the TCA Law is finalised), from the common reporting standard (CRS) (exchanges commenced in September 2018), and from e-commerce platforms (once the relevant provisions of the E-Commerce Law become operational). The new dimension in 2018 is the pooling of individual income and property holding data from the personal income and property information system in connection with the IIT reform.
A new tax administration data system for individuals, improved in anticipation of the passing of the new IIT Law (passed in August 2018), was designed for connection to the national personal income and property information system (on which efforts commenced in May 2017). As the IIT Law introduces a consolidated tax calculation across income sources, and provides for a new range of personal tax deductions, for dependent children's education, continuing education, serious illness medical treatment, housing mortgage interest and rentals, alongside the already existing deductions for social security contributions and certain health and pension insurance contributions, the new system will help facilitate the implementation of the new rules from January 1 2019.
Online tax filing and digital tax invoicing enhancements
Measures have been taken in 2018 to make online tax filing simpler and more secure for taxpayers. In this regard, the March 2018-issued SAT Shui Zong Fa  No. 32 (Circular 32) requires provincial tax authorities to upgrade their online tax filing systems so that:
The online tax filing system can be connected to the taxpayer's financial/accounting system;
The taxpayer's financial data could be automatically converted into data for online tax filing purposes;
Tax payable can be automatically calculated by the authority's filing system; and
Provincial tax authorities are required to ensure the security of the submitted data.
To ensure a harmonised national approach, the circular defines the reference criteria for the conversion of financial data (V1.0), with rolling updates to take place in future.
The online tax filing system enhancements occur in parallel with efforts to help taxpayers towards accurate input of information into these systems. The April 2017-issued SAT Announcement  No. 10 instituted an optional tax service for taxpayers to assist them in identifying and correcting tax calculation errors, in advance of formally submitting CIT annual filing returns. The October 2017-issued SAT Circular Shuizongfa  No. 124 provides, for VAT, a tool for cross-checking different sources of information, including VAT fapiao, returns, tax payments and other filing documents, for the purpose of identifying risks.
At the same time, in the digital tax invoice space, advances are being made in the use of blockchain. The Shenzhen tax bureau, supported by Tencent, in summer 2018 rolled out a pilot blockchain invoicing system that fully integrates transaction parties, payment service providers, WeChat invoice delivery, and the tax authorities. Using decentralised blockchain technology, an unalterable transaction record will lie behind the automatic generation of digital tax invoices (fapiao), triggered whenever a trader makes a sale and a customer pays (usually using WeChat Pay or Alipay). The customer can then use the digital fapiao received over WeChat for claiming relevant tax deductions, with the tax authority having received real-time information on all steps of the process of sale, payment, and tax deduction claim. Assuming such systems prove robust on pilot, their convenience will likely drive widespread registration by traders for the service. Coupled with the TCA Law plans to oblige all financial institutions, and potentially other payment providers, to mass report transaction information linked to taxpayer identification numbers (TINs) to the tax authorities, and supporting initiatives such as taxpayer social credit rating, it is anticipated that compliance by platform-based traders and service providers will progressively increase in future.
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Beijing 100738, China
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Tracey Zhang has more than 21 years' tax advisory experience in the financial services industry. She is the financial services national tax lead partner at KPMG China, specialising in banking, insurance, real estate funds and leasing.
Tracey is also KPMG national lead partner for tax transformation. She has been seconded to KPMG Holland to study the Dutch horizontal monitoring system and has established extensive knowledge and experience in tax risk control and tax technology. She has led professional teams in assisting a number of state-owned enterprises to establish or improve their tax risk control systems.
Senior Manager, Tax
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Beijing 100738, China
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Fang Wei has advised a variety of clients on both corporate tax issues and transfer pricing issues arising from tax planning, restructuring, compliance, audit defence, tax internal controls, and tax technology. Fang also has in-house tax work experience.
Fang services clients in a wide range of industries including financial services, construction, consumer and industrial markets, and internet companies, covering multinationals, state-owned enterprises, and privately-owned enterprises.
21 Floor, CTF Finance Centre
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Guangzhou 510620, China
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Lilly Li is the head of tax in southern China. She is based in Guangzhou and specialises in business and tax advisory services for corporate restructuring, cross-border tax-efficient value chain planning, tax-efficient transaction advisory on mergers and acquisitions (M&A) and initial public offering (IPO) projects.
Lilly provides China-based corporate tax advisory and transfer pricing services to multinational and domestic enterprises. Her experience covers a wide range of industries, for example, consumer markets, automobile, electronics, property and infrastructure.
Lilly has extensive experience in dealing with tax disputes and tax policy lobbying. For example she and her team have successfully assisted 13 Asia Games sponsors in applying for business tax exemption with the State Administration of Taxation (SAT); also they have assisted a number of listed groups in lobbying the SAT for the tax ruling which allows China companies to deduct stock option expenses before corporate income tax (CIT).
Before joining KPMG, Lilly worked with the China Tax Bureau and the Australian Tax Office in the areas of international tax administration, tax audit and transfer pricing.
Lilly is a member of Certified Practising Accountants Australia.
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Anthony Chau started his tax advisory career in 1999 with the corporate tax department of KPMG Sydney. Upon returning to Hong Kong in 2000, Anthony started practising in the areas of China taxation, customs duty and business advisory matters. Anthony was stationed in Guangzhou and Chengdu before he was relocated to KPMG in Shanghai in July 2010. Besides his tax-related roles in Shanghai, Anthony has also continued to manage the tax practice of KPMG in Chengdu and also leads the trade and customs practice of central China.
Over the years, Anthony has advised multinational clients on their expansion plans, holding structures, operations, cross-border transactions, as well as on their restructuring matters from taxation and business regulatory perspectives. He has also assisted numerous clients to negotiate with the tax/customs authorities throughout China on their daily compliance and audit matters.
In view of his experience in the various China locations, Anthony has gathered extensive local knowledge and expertise in assisting multinational companies in establishing the relevant types of entities depending on their business objectives and needs. He has also successfully assisted such companies to obtain tax and local financial incentives for their investments.
Anthony also works on numerous tax due diligence projects for both inbound and outbound investors across numerous industries.