Editorial

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Editorial

China has been busy refining its tax system and strengthening its tax policies over the past year, laying the foundations to advance fiscal policies.

The sixth edition of KPMG's China – Looking Ahead guide highlights how the country has transitioned from the business tax regime to VAT, implemented several recommendations under the OECD's BEPS Project and prepared itself for the common reporting standard. It also looks at the developments that will influence business decisions in 2017 and beyond.

The progress made in 2016 has allowed China to take the lead in driving forward global tax reform. Not only was it the host of the G20 Summit and the Forum on Tax Administration in 2016, but China has continued its economic expansion with its booming outbound direct investment. While the focus for organisations and governments has been on aligning international tax laws, China's tax reform measures have been about spurring investment and cross-border trade. Like its new indirect tax system, it aims to create world-leading policies.

China has adjusted its policies to align with its economic and strategic plan and therefore develop a model that focuses on services, consumption and the high-tech industry, particularly with the aim of driving its outbound investments along the One Belt, One Road. New customs regulations, including the release of the Customs Audit Regulations, and further guidance to improve the legislative framework for cross-border e-commerce are part of the wide-spread changes to drive China's economic transformation. In addition, incentive supply side programmes such as the high and new-technology enterprise scheme and 150% super deduction are expected to boost industry and service-consumption. The State Administration of Taxation (SAT), China's tax agency, has also worked on tax treaty policy, which is creating a new generation of double taxation agreements to keep pace with changing business practices.

Overall, China has developed a springboard for action and further international collaboration in the years ahead. Multinational enterprises looking to understand China's changing tax landscape will not have to look any further than this guide, as KPMG's tax specialists in China provide a digestible breakdown of the most prominent changes and offer a glimpse of the year ahead.

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