China Tax Alert - Issue 9, April 2014
The State Administration of Foreign Exchange released Circular 2 on 10 January 2014 to further relax regulations on overseas lending by China entities, amongst others. Circular 2 is a welcome development for both domestic enterprises and foreign invested enterprises. The relaxed regulations allow more flexibility for China entities to undertake overseas lending and provide alternatives for foreign investors to overcome the “cash trap” problem encountered in China. Circular 2 should also allow interim dividend payments to be made more easily in practice.