While the pandemic situation is looking up in many countries, here in China COVID is raising increasing worries. Especially the strict countermeasures being implemented is causing concern both to business as well as individuals. The example of Shanghai’s massive lockdown increases fears elsewhere in China. Just before the May Day Beijing saw a rise in daily numbers and is implementing city wide testing. Despite the coming holiday our minds cannot be at ease.

 

With the war and the rising COVID situation Finnish companies in China find themselves yet again, or perhaps still, in challenging times. Under these circumstances FBCB together with whole Team Finland launched a Flash Survey to Finnish companies to better understand how they are affected. The survey sent out earlier in April received answers from over a hundred Finnish company representatives. Based on the responses it seems that companies are more concerned of the COVID situation and its impact on operations. Shanghai lockdown has led the expectations of this year’s revenue go down for 50% of the Finnish companies in China. The percentage is higher (64%) for companies in Shanghai area. Views on investment outlook are even dimmer than on revenues. When considering that the survey was conducted over two weeks ago and the lockdown still continues, it is reasonable to assume the negative impact will only get bigger. For Finnish companies in China the war in Ukraine is also having a significant negative impact on revenues and investment outlook. The war is forcing majority of the companies to re-evaluate political risks for business in China. For the full report on the Flash Survey: Click here.  

In addition to arrival of summer, the month of May signifies the start of a new term in FBCB. Our Annual General Meeting, or AGM, was held on the 20th April. Over 30 company members were present in the AGM reviewing the activities of this term. With almost 100 events, including joint ones with other international chambers and Team Finland, it truly has been a busy year. A big thanks for this belongs to our Executive Director Ulla Nurmenniemi! Our community has also been growing steadily and we end the term with 59 company members. One special item on the AGM’s agenda was continuing the tradition of honoring people who have had a significant impact on FBCB's development and activities. The meeting approved the nomination of Seppo Selkälä as FBCB Honorary Member number 006. With over a decade of contribution to FBCB in various roles Seppo’s nomination was undoubtedly well deserved.

The most significant item on the AGM agenda was the proposal to change our name. This was a joint initiative by all the three Finnish Business Councils in China (Beijing, Shanghai and Guangdong). In order to better position ourselves and communicate more clearly who we are and what we do, all three councils supported the name change. Starting 1st of May Finnish Business Council Beijing will be renamed as Finncham Beijing.

The AGM also elected the Board for the next term. The new Board had its organizing meeting earlier this week. I am truly grateful and honored continue as the Chairman under our new name. Pekka Patja (Detection Technology) continues as Vice Chair and Ronghui Hu (UPM) takes over the other Vice Chair position. Larry Du (Ivana Helsinki) and Zhilin Yang (Blastman Robotics) are joined by Susanna Patja (Nokia), Xiaofeng Liang (Metso:Outotec) and Mika Woll (M5Architects) as new Board members. 

I look forward continuing the work with the new board! At the same I want to thank on the behalf of the whole FBCB as well as personally our board members who are stepping down: Vice Chair Yuan Liu (Wetend) and Board members Tommy Tang (Honkarakenne), Jenny Xiong (PwC) and Charles Dong (Chatai Consulting & Trade).

Despite the new name Finncham Beijing will start the new term as usual and there are already events lined up. Women in Business will meet on May 15th with the topic of “East meets West in Fashion”. May Afterworks is planned for May 27th in Digital 01 Building rooftop terrace. And we will be sending out another Team Finland Flash Survey halfway through the month. As always, you can find more information on upcoming events later in this newsletter. Naturally, we will follow the local rules on gathering restrictions and adjust if needed.

Before heading to the May Day holiday be sure to check out this month’s Guest Writer section by our new member Integra. Don’t miss it especially if you are working in an SME.

Finally, for the last time as Finnish Business Council Beijing, I want to thank all members, old and new, for the support and collaboration during this term. As we transform into FinnCham Beijing I look forward to the new term starting 1st of May.

Happy May Day Holiday!

Juha Tuominen

Chairman

FinnCham Beijing

In order to support the development of Micro and Small-Sized Enterprises (MSE), manufacturing and other industries, the Ministry of Finance and the State Administration of Taxation jointly issued on March 21, 2022 clarifying the VAT tax refund policy for MSE, manufacturing and other industries (MoF, STA [2022] Announcement No. 14). In particular, MSEs are allowed to refund their existing VAT credits previously incurred by the business on goods and services purchases. 

This comes at a time where numerous areas in China are experiencing a new wave of COVID-19 cases forcing many retail stores, manufacturing facilities, and offices to temporary shutdown their operation leading some to face severe cashflow constraints. This policy not only applies to businesses affected by the recent lockdown, but also benefitting those ones who are facing a cash shortage due to the general economic downturn. Qualified MSEs who have recently made or are planning to make large capital investments in the business also take note of the new measures. Taxes paid in relation to capital equipment, for example, can be claimed back in advance as opposed to being used to offsetting output VAT on future sales.

Ultimately, the tax refund does not reduce the total VAT liability of the business, but instead provides more tools to better manage the cash-flow through shifting the tax payment to the time of final sale.

In order to qualify for such tax refund, businesses should first examine whether they have VAT credits on their balance sheet and whether the amount is enough to warrant the effort of seeking a refund. Should businesses decide to apply for a refund, they can expect two separate refunds: 1) existing VAT credits on or before April 1st, 2019, and 2) incremental VAT credits incurred after March 31st, 2019.

When determining the “existing VAT credits”, if the taxpayer's VAT tax credits in the current period is greater than the VAT credits at the end of March 2019, the amount at the end of March 2019 shall be taken as the “existing VAT credits”. If the taxpayer's current period VAT credits is less than the VAT credits at the end of March 2019, then the taxpayer's current period of VAT credits will be the “existing VAT credits”. It should be noted that after the existing VAT credits are refunded, the VAT credit balance becomes zero.

Incremental VAT credits, on the other hand, refers to the newly added VAT credits incurred after April 1st, 2019. As mentioned above, if the taxpayer's existing VAT credits in the current period is greater than the existing VAT credits at the end of March 2019, the additional portion is the incremental VAT credits. It should be noted that once the taxpayer obtains the VAT refund, it is no longer necessary to compare with the existing VAT tax credits at the end of March 2019. The VAT tax credits at the end of the current period is the incremental VAT credits.

The policy defines Micro-Sized Enterprises as companies with annual sales revenue less than RMB 1 million; the standard for Small-Sized Enterprises are those with annual sales revenue less than RMB 20 million. In addition, MSE must also meet the following conditions to qualify for the refund; 1) a tax credit rating of A or B level; 2) no incident of tax fraud for 36 months prior to the application for tax refund; 3) not been penalized twice or more by the tax authority for tax evasion in the past 36 months; and 4) not utilized the refund upon collection or refund after collection policy since April 1st, 2019.

Micro-Sized Enterprises may apply for a refund starting with the April tax filing period and Small-Sized Enterprises may apply for a refund starting with the May tax filing period. 

FinnCham Beijing is part of Team Finland in China, and an outstanding platform for all Finnish businesses in China. For those companies which need more visibility, we have launched a Premium Membership. It's an upgrade from normal membership, as you can see from the table below.

For those companies in Finland, who are planning to expand their businesses to China, or are in the early stage and don't have an office in China yet, we have a distant membership. It's called Proxy Membership. A very cost-effective way to make your company known to a large audience, and get essential contacts for your future.

See all membership options HERE

The Premier Health Insurance Program of the FinnCham is provided exclusively for company members of FinnChams in China. Program is run by experienced international insurance broker – Oriental Benefit Group. The program offers companies with a comprehensive coverage and affordable rates. You can get the group insurance rates even if there's only one person in the company.

Who can join the Chamber’s Premier Health Insurance Plan?

Members of FinnCham China

Contact us for more information. FinnCham Representative at Oriental Benefit Group:

Zikai Liu, Managing Partner

Mobile: 18501718500

Email: zikai.liu@orientalbenefit.com