CHINA: A Country with unique paradoxes
As we move forward on our GAP project in China, we can clearly observe multiple paradoxes in this beautiful country. Wealth and poverty walk side by side, as “almost ancient” scooters, fixed with tape, fight for space on the street with more Porshes that we can count. The gracious ancient gardens and buildings located next to modern construction show this same contradiction, but also the coexistence of differences.
When we look at the legal business perspective, the same duality can be observed in Shanghai. Although this is a Communist Regime, this country clearly is trying to become an open economy under free market concepts. Free Trade Zones are well established in Shanghai and Beijing, and China is also changing its taxation as a way to incentivize MNCs to keep investing in the Chinese Market. Additionally, they are currently creating some tax incentives for R&D. Companies can deduct up to 80% of their R&D costs if this investment happens in country, and as long as the IP is deposited in China.
However, while I can sense great changes coming to increase international business around China, such as SAT 1000 Enterprise Program, VAT Reform and R&D incentives, I also learned that, just this month, MNC`s are having issues repatriating their profits to the US. Another paradox demonstrating that China is still a highly unstable economy and supporting that concept that the government issues circulars to change current regulation almost weekly.
Even though there are challenges in place, China is moving in the right direction, and the size of their population itself represent a great incentive for investments for consumer goods in general.
Columbus Industries Legal Team
Shane, Manish, Rob and Conrado
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