What’s New: The financial regulator for Beijing waived certain taxes and proposed pilot programs for cross-border business in a guideline encouraging foreign asset managers to develop business in China’s capital.
The guideline issued Tuesday provides detailed procedures for foreign asset managers to set up local units and register their products in Beijing while clarifying taxation issues. Equity investment funds will not be subject to business income tax for profits on stock trading. Interest income from investments in treasury bonds, local government bonds and interbank transactions will also be exempted from value-added tax.
The background: Starting April 1, China scrapped all foreign investment caps in the securities, fund management and futures industries as part of the opening-up of China’s financial sector to foreign players as pledged in its phase one trade deal with the U.S.
Oaktree Capital Management, a Los Angeles-based distressed debt manager, became the first foreign company to set up a wholly owned unit in China. The unit was registered in February in Beijing. In March, Chinese state-owned conglomerate Citic Group and U.K. life insurance giant Prudential finished registration of a joint-venture asset management business in Beijing.
Beijing recently launched the Qualified Domestic Limited Partnership (QDLP) pilot programs, giving foreign investment access to domestic investors. As of the end of May, 15 financial institutions expressed interest in participating in the program.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)
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