• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/14/2014

China - Foreign exchange rules for Shanghai free trade zone 

March 14: The People’s Bank of China (Shanghai headquarters) issued guidance concerning the expansion of RMB cross-border business in the Shanghai “pilot” free trade zone.

The new guidance (a circular) sets out the specific operational requirements regarding, among other items:

  • RMB cross-border settlements under current account and direct investment
  • Borrowing RMB from overseas
  • Cross-border mutual RMB cash pooling
  • Centralised collection and payment for current account transactions

Under current foreign exchange policies, enterprises have been required to submit a lot of documents to substantiate the authenticity of transactions before remittance can be handled—additional burdens for the enterprises. With the recent circular, the People’s Bank of China has introduced three principles of the international banking business, thereby allowing banks to provide cross-border RMB settlement services to their clients without reviewing all the contracts and invoices, on the basis that the banks have a sound understanding of their clients’ business. This in turn is expected to allow a majority of enterprises, with good reputation and compliance status, to enjoy convenient financial services.

Read a March 2014 report [PDF 1.31 MB] prepared by the KPMG member firm in China: Pilot Free Trade Zone Series — Issuance of Circular on Supporting the Expansion of RMB Cross-border Business in China (Shanghai) Pilot Free Trade Zone

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now