11 April 2016
China Delegates Power to Provincial Authorities to Designate Financial Leasing Pilots
The Ministry of Commerce (MOFCOM) and State Administration of Taxation (SAT) recently issued a joint circular on issues relating to mainland-funded leasing enterprises doing financial leasing business in the four pilot free trade zones. According to this circular, with effect from 1 April 2016, MOFCOM and SAT will delegate the work of designating the financial leasing pilots of mainland-funded leasing enterprises registered in the pilot free trade zones to the competent commerce department and state taxation bureau in the province, municipality or city with independent planning status where the respective pilot free trade zone is located. Existing regulations and procedures still apply to mainland-funded leasing enterprises registered outside of the pilot free trade zones that engage in financial leasing business. This measure was taken to support financial leasing business in the pilot free trade zones in actively making explorations for early and pilot implementation and accelerate the development of financial leasing.
The circular requires the competent provincial-level commerce department in the place where the pilot free trade zone is located and the state taxation bureau at the same level to bear the responsibility of verifying the relevant documents submitted by enterprises for the financial leasing pilot programme. The names of enterprises that meet the requirements will be jointly announced by the competent provincial-level commerce department and state taxation bureau. They will be included in the list of pilot enterprises for mainland-funded financial leasing and will enjoy the same treatment as mainland-funded financial leasing pilot enterprises on the list announced by MOFCOM and SAT.
The circular emphasised in particular that the competent commerce department at the provincial level must improve the system of industry regulation, strengthen supervision over key areas as well as irregularities in deposit taking, lending and other business, and effectively guard against regional and systemic risks. If an enterprise included in the pilot programme subsequently moves out of the pilot free trade zone, it must reapply for the confirmation of pilot status in accordance with the existing application regulations for enterprises outside of the pilot free trade zones.
Up to now there are over 600 financial leasing enterprises registered in the Guangdong Pilot Free Trade Zone.