Shanghai Free Trade Port Construction: On the basis of the existing three standards, the highest international regulatory standards

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Shanghai Free Trade Port Planning is still underway, but the general direction of its reform has become clearer. On November 10, (www.freeportchina.com) interviewed Professor Zhao Xiaolei, Shanghai Development Institute and Shanghai Institute of Free Trade Zone, Shanghai University of Finance and Economics, participating in decision-making consulting research on key issues concerning the planning and construction of Shanghai’s free trade area.

The report of the 19th National Congress of the Communist Party of China sets forth that greater reform autonomy should be given to the Pilot Free Trade Zone and exploration should be made to build a free trade port. The State Department’s “Plan to Completely Deepen the Reform and Opening-up of the China (Shanghai) Pilot Free Trade Zone” has been deployed in the special customs control zones of Yangshan Bonded Port Area and Shanghai Pudong Airport Bonded Area, and a free trade port area has been set up.

Wang Yang, vice premier of the State Council, stressed in his “Reading Guide of the 19th National Congress of the CPC” that “exploring the construction of a free trade port with Chinese characteristics will create an open new highland with a higher level of openness, a better business environment and a stronger radiation effect, It is of great significance for promoting the innovation and development of an open economy. ”

What is the main function of Shanghai Free Trade Port?

The core function of a free trade port should be to liberalize and facilitate international trade, cultivate a new mode of trade and new trade, promote trade transformation and upgrading, and upgrade the energy level of the International Trade Center. In connection with this core function, global capabilities and formats of industries such as international shipping, international investment and international finance should be nurtured under the conditions of convenient, free and standardized global cross-border flow of high-end elements and to enhance the integration and allocation of global high-end elements Ability and status of international value chain and develop new advantages of participation in leading the global economic and trade cooperation and competition.

In order to achieve the liberalization and facilitation of international trade, what major reform measures will Shanghai Free Trade Port have?

To achieve liberalization and facilitation of international trade, the major reform measures are “freeing up the front lines”, “second-tier safe and efficient control” and “free zones” to the highest international standard and to implementing higher standards. This is a free trade port System design of the core areas.

What are the specific “higher standards” for the so-called benchmarking international highest standards?

The so-called “higher standard” means higher than the free trade area of ​​the port regulatory standards, benchmarking the highest international standards. The basic elements are: First, goods and articles entering and leaving the “front line” are exempt from customary customs control, eliminating or minimizing trade control measures for incoming goods, minimizing or even exempting goods from entering and leaving the “frontline” and entering free trade Hong Kong’s goods do not pay customs duties and other import and export tax;

Second, in a free trade zone, enterprises are free to carry out production and business operations such as warehousing, logistics, sales, exhibition, maintenance, assembly, processing, manufacturing and packaging without the need for examination and approval in respect of business access in the zone. , The import and export of goods and articles in the “second line” shall be subject to the declaration and administration of import and export and the safe and efficient management of the “single window” of high standards of international trade shall be adopted.

What does “freedom in the area” mean to Shanghai’s free trade port?

Institutional Design Highlights of Shanghai Free Trade Port In addition to a higher level of “letting go”, there is also a higher level of “freedom within the zone.” Shanghai Free Trade Port is the first experimental platform for a new system of open economy. Based on its main functions, Shanghai Free Trade Port needs to cultivate and develop multi-dimensional functions and industries.

In order to adapt to the new features of economic globalization and the new trend of international free trade area development, Shanghai Free Trade Port should give priority to both trade and investment by relying on trade. From the trade of goods, both the trade of goods and the trade of services should be re-developed. From the onshore business Mainly to the coast, offshore business development and development from a single industry to the global supply chain development. The development of these functions not only requires “first-line” more freedom and convenience, but also calls for “economic” activities in the “district” with more convenient and lower-cost production activities.

In terms of financial regulatory innovation, Shanghai Free Trade Port will be what breakthrough? What are the limitations?

Within the scope of the free trade harbor, financial regulatory innovations are generally conducted in the areas of cross-border settlement and receipt and payment of funds for current account and direct investment business within the framework of the FT (Free Trade Account) sub-account accounting system for both domestic and overseas funds Mobility and currency exchange to relax regulation, improve freedom and convenience. It is unlikely that capital account convertibility will break through in a smaller area.

Challenging regulatory innovation is how to conduct a true review of the offshore business (offshore trade, offshore finance) that separates the flow of goods, funds and orders, and fulfills the requirements of “anti-money laundering, anti-terrorism financing and anti-tax evasion” Regulatory, but also for the real offshore business to provide efficient and convenient international financial regulatory services. In addition, in the field of international investment, financial regulation should also adapt to some new forms of investment such as VIE structural investment and offshore equity investment, which not only effectively prevent and control risks but also support the development of new international investment patterns.

How to understand the free trade port is “inside and outside the country,” the reference?

It is inaccurate to refer to a free trade port generally as “customs clearance outside the territory of China.” Because there are two meanings of “customs inside and outside the territory”, they should be used differentially. The first refers to the tariff and import and export tax level, that is, out of free trade port “front” of the goods, customs duties and import and export tax exemption; the second refers to the customs and port regulatory level, that is, outside the statutory authority of the customs and port supervision . If the first layer of understanding is possible, but the second layer of understanding is not accurate.

Why it is inaccurate to understand a free trade port as the statutory authority of customs and port supervision?

Because any free trade port (region) set up by any sovereign country or economy will not completely cancel the trade control, and will impose supervision on the goods, goods and technologies prohibited by law from being imported and exported. While U.S. foreign trade zones are the most relaxed in terms of regulation, Customs officers may assign Customs and Border Protection officers to supervise any transaction or process within the foreign trade zone. Operators must allow Customs and Border Protection personnel to enter Foreign Trade Zone and provide special equipment for compliance review or audit. Even Hong Kong, which has a high degree of freedom and trade, is not without regulation at all.

Please talk about the tax policy of Shanghai free trade port

There are some views that Shanghai Free Trade Port will be in the corporate income tax relief, I think it is over imagined.

Free trade ports need to build an internationally competitive tax system. Apart from the “first-tier” links, the “zones” may design relief policies on turnover taxes (value added tax and consumption tax). As for the enterprise income tax, my analysis is that enterprises that operate offshore businesses should have income tax concessions, but those enterprises that operate ordinary businesses should not have income tax preferential policies.

Which companies will benefit from the construction of Shanghai Free Trade Port?

According to the functional orientation of a free trade port, trade enterprises, especially those that operate international transit trades, will have greater opportunities for development. Vigorously developing international transit trade is an important part of the construction of Shanghai International Trade Center and International Shipping Center. Free trade port implementation of a higher standard of “first-line release,” will greatly save the time and cost of the two outside the business tax costs and promote international transit and offshore trade. Relaxation of the “front-line” regulation can also promote the development of trade in services, especially in the technology service trade.

The integration of district and port supervision of free trade port is also conducive to the development of international shipping enterprises. The free dividend of “free zones” in the free trade port is even more conducive to the development of global enterprises such as maintenance, manufacturing, storage and logistics, and cross-border e-commerce that are “original and original”. Compared with the special customs supervised areas outside the free trade port area, the enterprises operating international business can enjoy not only the bonded tax policy, but also the preferential policies for turnover tax and the more convenient and convenient regulatory services in the region.

In addition, the convenience trade reforms of free trade ports in foreign exchange management and cross-border settlement payments can spur the development of new businesses in third-party financial services and investment services. In short, free trade ports will bring greater institutional dividends to all types of enterprises engaged in international businesses in respect of the reform and innovation in liberalization of international trade with the highest international standards.

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