China Revises Administration of Foreign Invested Telecommunications Enterprises
Recently, the State Council of the PRC released a decree to announce the decision to revise 14 and abolish 6 sets of regulations. The Administration of Foreign Invested Telecommunications Enterprises has been revised accordingly, which will take effect on 1 May 2022. The key changes of the new Administration of Foreign Invested Telecommunications Enterprises are as follows:
- Requirements on foreign investors?telecommunications operation performance and experience are deleted.
The biggest highlight of the revision this time is the deletion of the requirement on major foreign investors?good operation performance and experience of basic and value added telecommunications services. However, for basic telecommunications services, the requirement that the major foreign investors should have the basic telecommunications services permit in the registered country or region is still retained.
According to the revision, if the foreign investor is only a capital contributor with no performance and experience in operating value added telecommunications services, it is also allowed to set up a foreign invested telecommunications enterprise and apply for the value added telecommunications services operating permit. If such amendment can finally be implemented, it will bring more room for foreign investors to invest in value added telecommunications services in China.
- Provisions on the ratio of foreign shareholding are revised.
Since China has gradually relaxed and cancelled some restrictions on the ratio of foreign shareholding in practice, for example, the proportion of foreign investment in operating e-commerce can be 100%, the revision adds an exception provision of "except otherwise stipulated by the State" to the original Article 6, which stipulates that the ultimate proportion of foreign investment shall not exceed 49% for basic telecommunications services and the ultimate proportion of foreign investment shall not exceed 50% for value added telecommunications services, in order to be consistent with the current relaxed or cancelled restrictions on the ratio of foreign shareholding.
- Approving procedures are revised.
The approving procedures regarding the original Examination Decision of Foreign Investment in the Telecommunications and Certificate of Approval for Establishment of Enterprises with Foreign Investment are all deleted in the new version, which confirms and implements the reform of "separating permits from business licenses" from the legislative level, simplifies and shortens the application procedures for foreign invested telecommunications business. Foreign investors can apply for the company registration first and then apply for the telecommunications services operating permit upon receipt of the business license.
KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.
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