Out-Law News 1 min. read

New Chinese regulations aim to ‘boost industry credibility’

A package of new regulations in China aims to promote “integrity and credibility” among corporations, the state-run Xinhua News Agency has reported.

According to Xinhua the new regulations approved by China’s government, which came into effect on 1 October, include an “interim regulation on the disclosure of corporate information” backed by Chinese premier Li Keqiang.

The disclosure regulation forces companies to deliver annual reports to industrial and commercial authorities within the first six months of the following year, Xinhua said.

Information that must be included in the reports includes “contacts, profits, tax payments and other business activities including details of new subsidiaries” and share purchases.

Companies who are found to be in violation of the new regulations for three consecutive years will be “blacklisted”, a move which Xinhua said would affect the companies in a number of areas including the ability to apply for loans.

As of 1 October, firms must also comply with new ‘tax credit management measures’ and requirements on the disclosure of information relating to “major illegal tax cases” brought by China’s State Administration of Taxation.

Xinhua said the tax-related regulations are designed to establish a “mechanism of punishing dishonesty and enhancing the tax credit system”. Tax credit will be divided into four categories (‘A’, ‘B’, ‘C’ and ‘D’) with ‘D’ being the lowest, Xinhua said.

According to Xinhua, category D taxpayers “will face high penalties and restrictions” in their operations, financing and production licensing.

A further five regulations have been introduced for the manufacturers and vendors of medical devices, Xinhua said. These regulations, drawn up in consultation with the State Food and Drug Administration, “clarify” the registration and licensing of production and sales, as well as supervisory requirements that are “expected to rectify market disorder”.

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