Domestic information

1. The State Administration of Financial Supervision, the Central Bank, and the China Securities Regulatory Commission jointly release the Announcement on the Work Arrangement for Handling Financial Consumer Feedback Matters

On June 2, the National Administration of Financial Regulation, the People's Bank of China and the China Securities Regulatory Commission jointly issued the "Announcement on the Work Arrangement for Handling Financial Consumer Feedback Matters". It is reported that the announcement is No. 1 announcement of National Administration of Financial Regulation in 2023. This announcement is aimed at implementing the decision-making and deployment of the "Party and State Institutional Reform Plan", ensuring the transfer and connection of the People's Bank of China's financial consumer protection responsibilities and the China Securities Regulatory Commission's investor protection responsibilities, and effectively protecting the legitimate rights and interests of financial consumers. (Source: Securities Times)

Lawyer's recommendation: According to the institutional reform plan of the State Council, the National Administration of Financial Regulation is uniformly responsible for the supervision of the financial industry other than the securities industry, and on the basis of the CBRC, the daily supervision responsibility of the central bank on financial holding companies and other financial groups, the responsibility of financial consumer protection and the responsibility of the CSRC for investor protection are transferred to the CBRC.

2. Cedar Holdings and its actual controller, Zhang Jin, is forcibly held for 8.5 billion yuan. The former billionaire has become a scoundrel

Recently, Cedar Holdings Group Co., Ltd., Cedar Industrial Group Co., Ltd., and Zhang Jin, the actual controllers of the two companies, have added information on the executors, with the executed subject matter reaching over 8.588 billion yuan, involving contract dispute cases. At the same time, the two companies, Cedar Holdings and Cedar Industrial Group, have multiple mandatory enforcement information, with two enforcement targets totaling 930 million yuan and 1.03 billion yuan respectively, both involving financial loan contract disputes. (Source: Caihui Information)

Lawyer's recommendation: Cedar Holdings was founded in 1997 and has been on the Fortune Global 500 list for four consecutive years. In May this year, Huangpu Branch of Guangzhou Public Security Bureau issued a case notice that Guangdong Yuanfang Investment Co., Ltd., a subsidiary of Cedar Holding Group Co., Ltd., has been investigated and dealt with according to law for illegal absorption of public deposits, and criminal coercive measures have been taken against the main suspect Zhang and others. It is understood that since January 2020, companies under Cedar Holdings have sold over 350 illegal "wealth management products" to natural persons, with a total scale of over 20 billion yuan.

3. The reform of trust classification will be officially implemented in June, and Sichuan Trust and others will accelerate risk management

The new regulations on the classification of trust businesses that have received attention from the industry have been officially implemented on June 1st. The reporter learned from industry insiders that the implementation steps of the future trust industry classification reform mainly start from business classification reporting. Insiders said that after June 1st, all business reporting standards will be implemented according to the new classification method. The next step is to follow the direction of regulatory classification guidance, do a good job in business transformation, and do not engage in channel business for pressure drop financing business. It is worth mentioning that under the guidance of relevant departments, trust companies are carrying out significant risk mitigation work. On May 25th, Sichuan Trust announced that the leading restructuring party of Sichuan Trust has been preliminarily clarified, striving to resolve risks as soon as possible in accordance with the law and smoothly. In addition, Anxin Trust has recently completed the change of its company name to Jianyuan Trust, and the overall risk management of the company has achieved phased results. (Source: Economic Information Daily)

Lawyer's recommendation: The new regulations for the classification of trust business have been implemented, and high-risk trust companies can fully utilize the three-year transition period to carry out risk asset disposal work on existing trust business.

4. China Securities Association: Detailed Rules for Securities Brokerage Business Issued

On June 9th, the China Securities Association, in collaboration with the "Measures for the Management of Securities Brokerage Business", drafted and formulated two self regulatory rules, including the "Implementation Rules for the Management of Securities Brokerage Business" and the "Management Rules for Customer Fund Accounts of Securities Companies", as well as the "Essential Terms of Securities Company Customer Account Opening Agreement" and "Essential Terms of Securities Trading Entrustment Agency Agreement" supporting documents, which were officially released and implemented. The above self-discipline rules and supporting documents mainly focus on refining the brokerage business responsibilities of securities firms, strengthening the identification of over ten million investors in securities accounts, ensuring that the annual return visit ratio of securities firms is no less than 10% of the total number of customers, prohibiting malicious solicitation of customers at low prices, clarifying the business activities of internet advertising, and ensuring that securities firms strictly implement account real name responsibility. (Source: Securities Times)

Lawyer's recommendation: The two self-discipline rules and supporting documents are based on the origin of securities brokerage business, providing comprehensive regulations for important links in securities brokerage business conducted by securities firms, which is conducive to protecting the legitimate rights and interests of investors.

5. Shanghai and Shenzhen Stock Exchanges: Overseas issuance and listing of Global depository receipt will usher in new regulations

On June 2, the Shanghai Stock Exchange and Shenzhen Stock Exchange respectively solicited public opinions on the Interim Measures for the Listing and Trading of Interconnected Depositary Receipts between Shanghai Stock Exchange/Shenzhen Stock Exchange and Overseas Stock Exchanges (revised in 2023). The revision of the "Interim Measures" mainly includes the following three aspects: firstly, clarifying the conditions that should be met for overseas issuance and listing of GDRs. If a listed company issues GDR overseas based on its newly added domestic stocks, in addition to meeting the prescribed issuance conditions, it should also be listed on the Shanghai/Shenzhen Stock Exchange for at least one year, and the market value before the application date should not be less than RMB 20 billion. The second is to clarify the review arrangements for the application for the issuance and listing of newly added basic stocks corresponding to GDR. The third is to strengthen the supervision of information disclosure throughout the entire process. (Source: Securities Times)

Lawyer's recommendation: Compared to other overseas listing measures, the issuance of GDR by enterprises has advantages such as a loose review system, a compact project cycle, a wide range of issuance targets, and relatively flexible use of raised funds.

6. The State Administration of Taxation and the Shanghai Municipal Government jointly issued the Implementation Rules on Accelerating the Construction of the Shanghai International Reinsurance Center

On June 8, Li Yunze, Director of the National Administration of Financial Regulation, announced at the 14th Lujiazui Forum that the National Administration of Financial Regulation and Shanghai jointly issued the Implementation Rules on Accelerating the Construction of Shanghai International Reinsurance Center, officially launching the "international board" of Shanghai reinsurance. It is understood that the Implementation Rules have formulated a total of 22 policy measures around improving the infrastructure and institutional system of the reinsurance market, deepening the supply and innovation capabilities of reinsurance products, promoting high-level institutional opening up of reinsurance to the outside world, and enhancing the construction of reinsurance talent attraction and training mechanisms. (Source: Official website of the State Administration of Financial Supervision and Administration of China)

Lawyer's recommendation: Building an "international board" for reinsurance is beneficial for enhancing the global risk identification awareness and ability of the domestic insurance industry, thereby providing customers with more comprehensive risk control services.

7. The Central Bank: soliciting public opinions on the Administrative Measures for Bond valuation Business in the China Interbank Bond Market (Draft)

On June 9, in order to standardize the China Interbank Bond Market valuation business and strengthen the construction of the bond market, the People's Bank of China released the Administrative Measures for Bond valuation Business in the China Interbank Bond Market (Draft for Comments) on its official website and solicited public opinions. There are 19 articles in the Measures, mainly referring to the experience of mature markets and combining with the practice of China's bond market, focusing on the neutrality, fairness, professionalism and transparency of valuation business, and focusing on clarifying the internal governance, basic principles of valuation, valuation methods, information disclosure, conflict of interest and other requirements of valuation agencies. (Source: 21st Century Business Herald, official website of the People's Bank of China)

Lawyer's recommendation: In recent years, Government bond's bond market has become increasingly rich in valuation products. The issuance of the Measures may effectively promote reasonable market pricing to improve bond market valuation products and valuation agencies.

8. China Securities Regulatory Commission: soliciting public opinions on the Administrative Provisions on the Public Offering of Investment fund Investment Consulting Business (Draft for Comments)

On June 9, the China Securities Regulatory Commission drafted the Regulations on the Management of Investment Advisory Business of Publicly Raising Investment fund, improved the wealth management function of the capital market, deepened the reform of the investment side, and cultivated the buyer intermediary team of the capital market. Now we are asking for public opinions. The main content of the "Regulations" includes: firstly, following the standardized principles for "investment" activities during the pilot period, strengthening the supervision of the investment process, further clarifying the control of management oriented businesses, optimizing investment dispersion, and other regulatory requirements. The second is to strengthen the supervision of "advisory" services, supervise and guide the industry to adhere to the origin of "advisory" services, continuously enrich the content of services, strengthen investor suitability and service matching management, standardize promotional behavior, strengthen the implementation of fiduciary obligations, and prevent conflicts of interest. The third is to address new issues and situations by addressing regulatory shortcomings and promoting orderly and compliant business operations. For example, strengthening the standardized management of cooperation and business development between investment advisory agencies and other institutions such as investment advisors and fund sales agencies, clarifying the regulatory requirements for investment advisory agencies to allocate products other than public funds, and exempting fund practitioners other than fund managers from the requirement of lockdowns when investing in our company's funds. (Source: Official website of China Securities Regulatory Commission)

Lawyer's recommendation: The Regulations clarify the specific norms and regulatory rules of the public offering investment advisory business, providing a strong legal guarantee for the long-term, standardized and healthy development of the Investment fund investment advisory business.

9. Draft Consumer Tax Law and Revised Draft Tax Administration Law to be included in the State Council's 2023 Legislative Work Plan

Recently, the State Council announced the 2023 legislative work plan, which includes the draft of the Tariff Law, the draft of the Consumption Tax Law, and the revised draft of the Tax Collection and Management Law. The draft of the Tariff Law is to be submitted to the Standing Committee of the National People's Congress for review, while the draft of the Consumption Tax Law and the revised draft of the Tax Collection and Management Law are to be submitted to the Standing Committee of the National People's Congress for review. (Source: China Tax News)

Lawyer's recommendation: "Implementing the principle of statutory taxation" is an important reform task proposed at the Third Plenary Session of the 18th Central Committee of the Communist Party of China. The establishment, taxation, and governance of taxes in accordance with legal provisions are closely related to the modernization of the national governance system and governance capacity, as well as the interests of the vast number of business entities and the people. In recent years, the pace of tax legislation has accelerated, and 12 out of the current 18 tax categories have completed legislation, effectively enhancing the scientific, stable, and authoritative nature of the tax system. For taxpayers, the improvement of the tax system is beneficial for them to pay taxes in accordance with the law, reduce the occurrence of tax disputes, and protect their rights in accordance with the law.

10. Make substantial progress in promoting the construction of a unified national market

The recent executive meeting of the State Council was held to study and implement the overall work plan and recent measures for building a unified national market. At the meeting, it was proposed to make substantial progress in promoting the construction of a unified national market. The next step is to carry out the clean-up of policies and measures that hinder the Tongil Market and fair competition, formulate a list of precautions against improper market intervention, and establish a quick response mechanism for business entities to reflect problems. (Source: Xinhua News Agency)

Lawyer's recommendation: For a long time, local policies such as financial returns or incentives have improperly hindered the construction of a unified national market and hindered high-quality development. The next step is to clean up local tax policies that affect fair competition in order to build a unified national market.

11. Misenjoyment of Hainan Free Trade Port Tax Preferential Individual Income Tax Settlement Case Re Announcement

On June 9, the tax authorities announced five more cases of failing to handle Personal income tax settlement according to regulations. Specifically, it includes: false reporting of three insurances and one fund, false reporting of special additional deductions for continuing education, false reporting of special additional deductions, underreporting of income, and incorrect enjoyment of tax benefits from Hainan Free Trade Port. (Source: State Taxation Administration)

Lawyer's recommendation: It is the legal obligation of every taxpayer to handle individual income tax settlement according to law, and credulous of the so-called tax refund "secret collection" or false rumors will not only affect their tax credit due to false filling, but also may disclose personal privacy information to Internet fraud criminals. When enjoying the corresponding individual income tax deduction benefits or the tax policies of Hainan Free Trade Port, one should pay attention to whether they meet the applicable conditions of the corresponding policies.

Overseas information

1. Hong Kong: Further update of the Foreign Source Income Exemption (FSIE) system

The Hong Kong government recently released a consultation paper on the latest FSIE system guidelines issued by the European Union, titled "Improving the Hong Kong FEIS Foreign Sale Proceeds System", to expand the scope of disposal proceeds for more asset classes. (Source: globaltaxnews. ey)

Lawyer's recommendation: Although Hong Kong has implemented the FSIE system since the beginning of this year, Hong Kong is still on the EU's observation list. In response to the requirements of the European Union, the Hong Kong government will further revise its FSIE system to enable Hong Kong to be removed from the observation list of non cooperative jurisdictions in the EU for tax purposes.

2. United States: The Supreme Court upheld the power of the Internal Revenue Service to issue non notice subpoenas, but stated that the power was not unlimited

On May 18, 2023, the United States Supreme Court sided with the Internal Revenue Service in a dispute. The focus of the dispute is that the Internal Revenue Service has the right to issue bank account record summonses without notifying the relevant account holders. (Source: insightplus. bakermckenzie)

Lawyer's recommendation: The decision of the United States Supreme Court is not a complete victory for the Internal Revenue Service. In fact, the majority and unanimous opinion reflect the court's significant reservations regarding the use of unnoticed subpoenas by the IRS, especially in cases involving innocent third parties.