Opinions of Shanghai Municipality on Encouraging Enterprises to Set up Trade-oriented Headquarters is Coming!
On July 26, 2021, in accordance with the Regulations of Shanghai Municipality on Promoting the Construction of an International Trade Center, Shanghai's Fourteenth Five-Year Plan for National Economic and Social Development and the Outline of Long-Term Goals for 2035, to comprehensively strengthen the city's "four major functions" and improve the "five-type economy", the Shanghai Municipal Commission of Commerce jointly with Shanghai Development and Reform Commission, Shanghai Municipal Finance Bureau Shanghai Municipal People's Government Cooperation and Exchange Office announced and published the Opinions of Shanghai Municipality on Encouraging Companies to Set up Trade-oriented Headquarters (the “Opinions”).
1. Definition and Purpose
The so-called “trade-oriented headquarters” mentioned in the Opinions refers to a headquarter organization established in Shanghai by domestic and foreign enterprises with single or integrated trading functions such as procurement, distribution, marketing, settlement, and logistics. The basis of the Opinions is to comprehensively strengthen the "four major functions - global resource allocation function, scientific and technological innovation policy source function, high-end industry leading function and open hub portal function” of Shanghai, strengthen and optimize the "five-type economy - innovative economy, service-oriented economy, open economy, headquarters-based economy and a flow-based economy” of Shanghai, to further gather and cultivate more multi-functional and high-level domestic and foreign trading enterprise headquarters, and support leading enterprises in the trade field to become bigger and stronger.
2. Applications and Qualifications
The Municipal Commission of Commerce is responsible for the identification of trade-oriented headquarters and coordination of relevant departments to jointly carry out related work to promote the development of trade-based headquarters. The trading headquarters should be registered in Shanghai, have independent legal personality, and meet at least one of the following conditions:
1) The main business is domestic wholesale and retail, the business income accounts for more than 50% of the total operating income, and the operating income (sales income) of the previous year exceeded 10 billion RMB;
2) The main business is international trade in goods, the business income accounted for more than 50% of the total operating income, and the operating income (sales income) of the previous year exceeded 6 billion RMB;
3) The main business is logistics warehousing or international service trade, the business income accounted for more than 50% of the total operating income, and the operating income (sales income) of the previous year exceeded 4 billion RMB; or
4) Platform transactions are the main business, with more than 5,000 registered members or merchants and of which more than 30% are non-local enterprises. Among them, the annual transaction volume of consumer-oriented platform companies exceeds RMB 5 billion; the annual transaction volume of platform companies for enterprises (providing inter-enterprise transactions) exceeds 15 billion RMB;
Those who have made outstanding contributions to the economic development of the region may also be considered as qualified. Noting that to apply for the certification of a trade-oriented headquarters, an audit report of the applicant for the past year shall be submitted.
3. Subsidy and Government Incentives
There are numerous beneficial policiesfor trade-oriented headquarters.
1) Funds supports
Trade-oriented headquarters that meet the policy conditions can apply for foreign trade special funds, special funds for service trade development, service industry development guidance funds, and high-tech achievement transformation funds. Trade-oriented headquarters companies are encouraged to be included in the whitelist database of the Shanghai Administration Center of Policy Financing Guanratee Funds for SMEs for support.
2) Access to the cross-border two-way RMB fund pool
The so-called "cross-border two-way RMB fund pool (人民币双向资金池 in Chinese)" is a mechanism by which the People's Bank of China allows multinational enterprises in China to open a special account in the bank to operate the remittance of cross-border RMB funds and facilitate the internal capital dispatching behavior of the multinational group. Trade-based headquarters are encouraged to carry out various cross-border RMB businesses based on their own operation and management needs. Qualified trade-oriented headquarters can carry out centralized operation and management of cross-border funds of multinational companies according to their own operation and management needs, and carry out fund collection, allocation, settlement, hedging, investment financing and other businesses in accordance with their group business model.
3) Favorable taxation system
Trade-based headquarters are encouraged to participate in the electronic value-added tax invoices, simplify the process of upgrading and incremental business of special value-added invoices, and implement tax policies related to corporate restructuring and reorganization.
4) Simplification of entry and exit procedures
Eligible Chinese nationals from trade headquarters who travel to APEC countries due to business needs can apply for APEC business travel cards to enjoy multilateral long-term visas and fast customs clearance. Foreigners who need to enter the city temporarily for multiple occasions can apply for multiple visas with a validity period of no more than 1 year and a stay period of no more than 180 days. Senior foreign managers of trade-oriented headquarters can be recommended to apply for permanent residence in China in accordance with the Administrative Measures for the Examination and Approval of Foreigners' Permanent Residence in China.
The authorized legal representative and senior officers of the trade-based headquarters can enjoy the green channel service when carrying out the infectious disease surveillance and physical examination at entry.
5) Other governmental subsidies
For eligible trade-oriented headquarters, the customs procedures will focus on trade facilitation, innovation of the supervision system and supervision model, striving to improve the efficiency of customs clearance, and providing personalized customs clearance convenience for import and export goods. In addition, Shanghai Enterprise Service Cloud has also been engaged to provide a communication and feedback mechanism for trade-oriented headquarters, strengthening regular visits and docking services to various headquarters enterprises. What’s more, for the recognized trade-oriented headquarters, each district may provide subsidies for establishment, renting, etc. according to relevant regulations, and rewards may be given to those that have made outstanding contributions to regional economic development. The government will facilitate the introduction of talents from trade-oriented headquarters in terms of settlement, children's enrollment, medical security, and application for talent apartments.
The Opinions will be implemented on September 1, 2021 and will be valid until August 31, 2026. We believe the Opinions will encourage companies with the ability to allocate such international and domestic resources to set up their trade-oriented headquarters in Shanghai. It is of great significance to further expand Shanghai's domestic opening, build new advantages in an open economy, increase trade concentration and radiation, promote the integrated development of investment in the Yangtze River Basin, and promote enterprises to serve the country as well go global.
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