Global

Details

  • 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




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