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April 3, 2019

China enacts new foreign investment law

On 15 March 2019, China’s National People’s Congress approved the Foreign Investment Law of the PRC (the Foreign Investment Law). The Foreign Investment Law will become effective on 1 January 2020 and will replace existing foreign investment laws.

The key features of the Foreign Investment Law are as follows:

  • Chinese subsidiaries of foreign parents will be treated in the same manner as Chinese-owned Chinese entities; however the former is subject to a negative list of foreign investment which prohibits foreign investors from investing in specific industries.
  • Foreign-invested enterprises are allowed to raise funds through the public offering of stock, corporate bonds and other securities.
  • New registration forms will be required for investments under the Foreign Investment Law. A five-year transition period is provided to change all required registrations forms to comply with the rules under the Foreign Investment Law.

The Foreign Investment Law intends to open the basic framework of investments to foreign investors, and to actively promote, protect and regulate the foreign investments. While many of the rules are still pending further interpretations, it is anticipated that the respective government authorities will provide clarifications and guidance of the rules.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Tax Services Limited, Hong Kong
  • Jane Hui |
  • Becky Lai |
Ernst & Young (China) Advisory Limited, Shanghai
  • Walter Tong |
  • Vickie Tan |
Ernst & Young (China) Advisory Limited, Beijing
  • Henry Chan |
  • Martin Ngai |
  • Andrew Choy |
Ernst & Young (China) Advisory Limited, Shenzhen
  • Clement Yuen |
Ernst & Young LLP (United States), China Tax Desk, New York
  • Min Fei |
  • Andrea Yue |
  • Vickie Lin |
  • Ryan Lu |
  • Sherry Cui, Transaction Tax |
Ernst & Young LLP (United States), China Tax Desk, Chicago
  • Lucy Wang |
Ernst & Young LLP (United States), China Tax Desk, San Jose
  • Diana Wu |
Ernst & Young LLP (United States), Asia Pacific Business Group, New York
  • Chris Finnerty |
  • Kaz Parsch |
  • Bee-Khun Yap |



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