China officially acceded to the «Convention Abolishing the Requirement of Legalization for Foreign Public Documents» on 8 March 2022, also known as the “Apostille Convention” (hereinafter also as “Convention”) which is an international treaty drafted by the Hague Conference on Private International Law (HCCH), and the Ambassador of China to the Netherlands formally submitted, on behalf of China, the Convention to the Ministry of Foreign Affairs of the Netherlands, the depositary of the Convention. This Apostille Convention will be taken into effect in November of this year.
- What is the Apostille Convention?
The Apostille Convention is an international treaty that simplifies the process of authenticating public documents for use in foreign countries.
The Convention was adopted by the HCCH in 1961, and it has since been ratified by over 120 countries and territories worldwide, including Hong Kong and Macao, and has become one of the most widely applied multilateral treaties in the area of legal cooperation, with several million Apostilles issued each year. As of March 2023, 124 states are contracting states of the Apostille Convention.
Under the Convention, a public document that has been issued in one member country can be certified for legal use in any other member country by obtaining an “apostille” certificate from a competent authority designated by the issuing country.
The apostille is a form of authentication that verifies the authenticity of the signature, the capacity in which the person signing the document acted, and, where appropriate, the seal or stamp attached to the document. It eliminates the need for further certification or legalization by consular or embassy officials, simplifying the process and saving time and costs for those who need to use foreign public documents for legal purposes.
- What does China’s accession mean for foreign trade and business?
According to the spokesperson of the Ministry of Foreign Affairs – Mao Ning, China’s accession to the convention “will bring two major advantages”: a) reducing time and economic costs of cross-border circulation of documents, and b) optimizing the business environment.
- For ordinary citizens, this means easier and faster applications for various documents, such as criminal records, healthcare certificates, driver’s licenses, degree certificates, and birth certificates, that may be required for various administrative tasks.
Mao Ning stated that after joining the convention, the time for an individual to complete the preparation of a document to be used abroad will be reduced from about 20 working days to just a few. In addition, the average time for document transfer between contracting states will be reduced by around 90 percent.
- In terms of optimizing the business environment, the change will be the most beneficial for companies that frequently have cross-border processes, whether that is domestic companies hiring foreign employees, import-export businesses, or multinationals with cross-border operations.
Mao Ning estimated during the press meeting that around 70 percent of commercial documents required for import and export with China will be covered by the Apostille Convention and therefore no longer require consular certification.
- What is the scope of the Apostille Convention?
The Convention only applies to “public documents” (Art.1). This term is not expressly defined in the Convention. The public nature of a document is determined by the law of the place where the document originates. It may extend to any document that is not a private document.
The Convention mentions four types of documents eligible for apostilles:
- court documents;
- administrative documents (e.g., vital records);
- notarial acts;
- official certificates which are placed on documents signed by persons in their private capacity, such as official certificates recording the registration of a document or the fact that it was in existence on a certain date and official and notarial authentications of signatures.
Currently, in order to use foreign documents in China for administrative purposes, they need to first be notarized and authenticated by local parties and then be further authenticated by the Chinese embassy or consulate in the country in which the documents are issued.
The Apostille Convention does not apply to documents issued by diplomatic or consular officers, or to administrative documents dealing directly with commercial or customs operations. The reason for this exclusion is that these documents are usually already exempt from legalization.
With that being said, after joining the convention, certain documents for China may still require additional authentication procedures. Therefore, it is still possible that the apostille procedures cannot be used in China for documents from certain countries, even if they are members of the Apostille Convention, and vice versa.
There is still some time left until November this year, so please stay tuned in case there are any policy updates in the meantime. For more information, you may access the link: HCCH | Apostille Section.
For more information, please feel free to contact us.
Reference:
OUTLINE of the Convention of 5 October 1961 Abolishing the Requirement of Legalization for Foreign Public Documents
https://assets.hcch.net/docs/80d0e86f-7da8-46f8-8164-df046285bcdd.pdf
Foreign Ministry Spokesman Introduces Positive Significance of China’s Accession to the Convention on the Decertification of Foreign Public Documents
http://www.gov.cn/xinwen/2023-03/10/content_5745904.htm
(Continued from the previous article)
- Provision on bona fide acquisition of false special invoices
«Circular of the State Administration of Taxation on the Settlement for the Taxpayers Obtaining the False Special Invoice of Value-added Tax without Acknowledgement» defines what is “bona fide”.
It is stated in the Circular that the purchaser shall be deemed to have obtained the false special invoice in good faith if all the following conditions are met:
- a genuine transaction between the purchaser and the seller;
- the sale is made using the special invoices of the province (autonomous region, municipality directly under the Central Government, and cities listed in the plan) in which the purchaser is located;
- all the contents of the special invoices match with the actual ones, such as the name of the seller, the seal, the number of goods, the amount, and the tax amount; and
- no evidence that the purchaser knows that the special invoices provided by the seller were obtained by illegal means.
On the other hand, tax authorities of the purchaser’s location shall grant credit for input tax or export tax refund in accordance with the law, if:
- the purchaser is able to obtain again from the seller a legal and valid special invoice issued by the anti-counterfeit tax-control system; and
- the purchaser has obtained the certificate that the tax authorities in the place where the seller is located have conducted or are conducting an investigation and punishment on the seller’s false special invoices accordingly.
However, if the above conditions cannot be met, the input tax deducted or the export tax refund obtained by the purchasing party shall be recovered accordingly.
In addition, if the taxpayer has obtained in good faith a false special invoice that has been recovered and deducted in accordance with the law, then the taxpayer does not need to consider the provisions of Article 32 of the «Tax Collection Administration Law of the People’s Republic of China»: – If the taxpayer fails to pay the tax in accordance with the prescribed period, and the withholding agent fails to settle the tax in accordance with the prescribed period, the tax authorities shall, in addition to ordering the payment within the prescribed period, impose a late payment fee of five percent of the tax due on a daily basis. If the taxpayer fails to pay the tax in accordance with the prescribed period, the taxation authority shall, in addition to ordering the payment within the prescribed period, impose a late payment fee of five ten thousandths of the late payment of tax on a daily basis from the date of the late payment of tax. In other words, tax authorities will not add the late payment fee arising from the recovery of past taxes.
- Necessary documentation in case the tax inspection happens
Through the above layer-by-layer analysis, accountants of enterprises need to prepare the necessary financial documents to respond to tax inspection, while supporting themselves if they are bona fide purchasers, including but not limited to: –
- the original special invoice was identified as a false invoice
- purchase and sale contracts/business contracts or other contracts involving the invoice
- the goods involved in the incoming order, outgoing order, transfer orders, or transport documents
- relevant accounting documents
- bank payment voucher
- VAT declaration report for the month in which VAT is deducted, and CIT annual return
- statement of the entire business transaction and tax declaration
To sum up, enterprises do not need to be too panicky after receiving the Notice of Tax Inspection. Prepare the above list of supporting materials first and conduct self-inspection after communicating with the relevant tax officer to understand the situation. Companies that have evidence to prove they are bona fide invoice purchasers should actively respond to the tax authorities’ inspection and cooperate with the follow-up investigation. The enterprise will usually pass the tax inspection successfully if they respect all the conditions mentioned previously.
If you have any questions, please feel free to contact us.
References:
«Circular of the State Administration of Taxation on the Settlement for the Taxpayers Obtaining the False Special Invoice of Value-added Tax without Acknowledgement»
http://www.chinatax.gov.cn/chinatax/n359/c448/content.html
China is now fully open! In order to better coordinate the epidemic prevention and control as well as the needs of economic and social development, and to facilitate the people-to-people exchange between China and foreign countries, the National Immigration Administration of PRC has decided to adjust the visa and entry policy starting as of Beijing time at 00:00 on March 15, 2023.
- Valid visas issued before 28 March 2020 by the Chinese visa authorities abroad will resume functioning.
- Foreigners may apply for all types of visas, including tourism and medical treatment.
- Port visas shall resume being issued in line with the relevant laws and regulations.
- The visa-exemption policy for Hainan, visa-exemption cruise policy for Shanghai, visa-exemption policy for foreigners to visit Guangdong from Hong Kong and Macao, and visa-exemption policy for ASEAN tour groups to Guilin, Guangxi shall resume operation.
In recent times, the immigration policies of many countries are updated in real-time. In addition to the reopening policy, other restrictions are listed below for your consideration.
Chinese embassies in many countries notice: From 15 March, antigen testing instead of nucleic acid testing.
According to the latest requirements of the Chinese government regarding the optimization of pre-trip testing measures for people traveling to China, starting from 15 March 2023, passengers flying directly from specific countries[1] to China are allowed to replace nucleic acid testing with antigen testing (including self-testing with kits). In order to facilitate the pre-trip preparation of travelers, the embassies concerned have issued guidelines on epidemic prevention and control.
- Distal testing: Nucleic acid testing within 48 hours before boarding or self-testing with antigen kits, negative results before going to China, positive results please go to China after turning negative.
- Customs declaration: After obtaining a negative test result, fill out the “Health Declaration Card of the People’s Republic of China” through the WeChat app “Customs Passenger Service” (“海关旅客指尖服务”), the Customs APP or the web version to make declaration.
- Airlines are not required to check pre-boarding nucleic acid test certificates and antigen test results.
- In-flight epidemic prevention: Please insist on wearing a mask during the flight and do your personal protection to reduce the risk of infection.
- Entry quarantine: Upon arrival at the port, complete the necessary customs clearance procedures with the customs health declaration code. Customs will test a sample of people with abnormal health declarations or fever and other symptoms in accordance with a certain percentage.
- passengers with positive test results, in accordance with the requirements of the notification letter, go home/living place for isolation, or medical treatment;
- passengers with negative test results, by the Customs and Excise Department in accordance with the “Frontier Health and Quarantine Law of PRC” and other laws and regulations to implement routine quarantine;
- passengers with normal health declarations and tests can pass the entrance.
- Territorial epidemic prevention and control: Passengers should strictly comply with the requirements of territorial epidemic prevention and control after entering the country.
Policies vary from country to country, so it is recommended that you pay attention to the latest Chinese embassy and consulate notices in real-time before making travel arrangements, read them carefully, and follow them to avoid affecting your trip.
Should you have any further questions, please feel free to contact us.
Reference:
Further Adjustment of Visa and Entry Policy for Foreigners to China
Authority: National Immigration Administration
Date: 2023-03-14
https://www.nia.gov.cn/n897453/c1566449/content.html
Notice on Further Adjustment of Visa and Entry Policy for Foreigners to China
Authority: Embassy of the People’s Republic of China in the United States of America
Date: 2023-3-13
http://us.china-embassy.gov.cn/chn/lsfw/zj/qz/202303/t20230314_11040138.htm
[1] Currently, the following countries have issued this notice: France, Italy, Denmark, Spain, Georgia, Tanzania, Nepal, Mongolia, Vietnam, Iran, Greece, Brunei, Thailand, New Zealand, Malaysia, etc.
