New Era in China ushering in new business opportunities

In his keynote speech at the opening ceremony of the Boao Forum for Asia 2018 (BFA) on April 10, President Xi Jinping described economic globalisation as an irreversible trend, and noted that China would continue on its course of opening-up. This is positive news for enterprise, as extended opening-up will bolster investor confidence globally, while leading to a wide range of new business opportunities.

Against the backdrop of the 40th anniversary of China’s reform and opening-up, President Xi announced steps would be taken to widen market access significantly, create a more attractive investment environment, strengthen protection of intellectual property rights (IPR) and expand imports.

The Government Work Report released earlier this year had touched on most of these measures, but the current trade environment has given them new significance. Measures for enhancing alignment with international economic and trading rules, along with increasing transparency were specified, being regarded as particularly important for China’s development at this stage.

Measures on China’s further opening up and business implications include:

1. Further opening up in the financial sector

The People’s Bank of China unveiled policy details as well as a timeline on 11 April, with policies focusing on expanding market access and lifting ownership restrictions. This series of deeper financial opening-up measures are beneficial to both China and the global financial industry, as it will create new opportunities for domestic and foreign players in the areas of market competition, channels, products and services, customer experience, and operations.

2. Further opening up in the auto sector

The market entry restrictions for the auto industry would be phased out over the next five years. Gradually lifting the market entry barriers for new energy vehicles, as well as commercial and passenger vehicles will help home-grown brands optimise their production capacity structure and ramp up investments in research & development and production operations, thereby improving their competitive edge in international markets.

3. Taking the initiative to expand imports

The reduction of auto and anti-cancer drug tariffs will allow foreign models to be introduced to the country at a lower price. This may bring pressure to Chinese domestic enterprises initially, but it also motivates the Chinese enterprises to enhance their capabilities and adjust to the competitiveness of the international market.

4. Creating a more attractive investment environment

It can be anticipated that in the future, China will create a more fair and stable tax and business environment for taxpayers by focusing on both “reducing tax burdens” and “facilitating tax compliance”. The evolving tax and business environment are crucial for enhancing a country’s soft competitive power.

5. Strengthening the protection of intellectual property rights

In addition to actions taken at the national level, enterprises need to strengthen the protection of their IPR, investing more in enhancing their awareness and ability to innovate, and continually attract and cultivate innovative talent. By doing so, together with the government, they could effectively push IPR progress to a higher level.

6. Benefitting from the Belt and Road Initiative (BRI)

Future BRI projects will also likely pay closer attention to effects on the environment and seek to minimise environmental impacts in order to achieve the goal of “shared benefits” for all. The BRI is also not just about Chinese outbound projects, but also concerns foreign investment into China.

Read full article

2017 APEC CEO Survey China Report

Chinese firms seek growth through trade.

More than 200 CEO’s in China and Hong Kong were interviewed on the theme of A World in Transition. Executives share with us their business confidence levels, their perception of trade trends, how businesses are organising themselves, their operational challenges, and their outlook and expectations of new trade orientations.

Key findings of the China report:

  • Survey revealed that 23% of executives in China think that significant progress has been made towards free trade across the Asia Pacific region in the last 12 months, up from 15% in 2016. Moreover, 33% of the executives surveyed in China believe that revenue opportunities will increase in the next 12 months due to new trade agreements, compared to 27% of APEC respondents.
  • China’s role in APEC is going to get more prominent as opportunities for exports and fixed asset investments emerge from the BRI initiatives. Given this outlook, not only do executives in China expect APEC to play a larger role in facilitating economic growth and cooperation for the region, accelerating economic integration of micro, small and medium enterprises (MSMEs) (33%) and facilitating labour mobility (26%) are priorities identified by executives in China.
    Survey found that 39% of the executives in China are “very confident” about their company’s prospects for revenue growth in the next 12 months compared to 24% who reported the same in 2016 .
  • In terms of digital transformation, survey shows that the percentage of executives in China “automating certain functions in their organisation” will increase from 64% today to 83% in three years.
  • In terms of emerging technology impacting the workforce, about 51% of executives in China reported that they expect to move to new structures of employment including more ‘gig’ talent and outsourced labour in three years compared to 31% of the executives today.


Read the full paper

China Economic Quarterly November 2017

Overall 2017 economy likely to outperform market expectations, despite moderately slower growth in third quarter.

This latest issue of China Economic Quarterly, which provides analysis of major economic data points in China for Q3 2017, summarises main policy developments and discusses hot topics of interest. In the third quarter, China’s GDP growth slowed slightly as expected to 6.8%, partly due to the government’s efforts to rein in property investment and debt risks.

Here are some highlights of the macro economic and policy updates:

  • The economic growth rate in 2017 is likely to demonstrate a better performance than that of 2016 and beat the market expectation of 6.7% thanks to the strong contribution from the service sectors.
  • The International Monetary Fund (IMF) has upgraded its economic forecast for China to 6.8% and 6.5% for 2017 and 2018 respectively. This is the fourth time this year that the IMF has upgraded China’s economic forecast.
  • As the national and local governments step up their restrictive policies to further curb speculation, property sales might decrease in the fourth quarter and next year.
  • China’s imports and exports had the best performance amongst all major economic indicators, thanks to the moderate recovery of global economy and fairly strong domestic demand.
  • China will step up efforts to protect the legal rights and interests of entrepreneurs, strengthen protection of intellectual property rights (IPR), fight against monopolies, unfair competition practices and regional protectionism, and remove regulations that undermine fair competition.

Download full report


To read more, you can access the latest issue of China Economic Quarterly by clicking the following links:

Hong Kong:

China’s new leadership rolls out new blueprint for future development

The 19th National Congress of the Communist Party of China which recently concluded (18-24 Oct) in Beijing has proven to be a landmark event. The Party transferred power to a new Political Bureau Standing Committee and fortified guiding theory by adding: the “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era”.

The 19th Party Congress laid out clear visions, principles and a roadmap for China’s development over the coming 30 years. The journey towards building China into a “great modern socialist country” by 2049 will lead to profound impacts on China’s economic and social development in the next three decades, and concurrently, will generate significant repercussions that will resonate around the world.

Consequently, PwC has developed an in-depth review of the Party’s policy roadmap along with its impacts for potential investors and corporations operating in China. Details are provided on the following important topics:

• The economy
• Financial risk and bad debt
• RMB and monetary policy
• SOE reform
• Private entrepreneurship
• Foreign investment in China and China’s outbound investment

The business review also highlights three particular bright spots for future investment:

  • Technology and innovation
  • Improving people’s wellbeing
  • Green development/environmental protection.

To find out more, please see below the full business review of China’s 19th Party Congress.

Read more

United States: release of framework for tax reform

3 October 2017

On 27 September 2017, the Trump Administration and Congressional Republican leaders released a nine-page “Unified Framework for Fixing Our Broken Tax Code” (the “Framework”). The Framework statement is the latest product of tax reform discussions and calls for a 20% corporate tax rate, a new 25% rate for certain pass-through business income, and international reforms that include a territorial tax system and a one-time mandatory repatriation tax.

The Framework calls for the House and Senate tax committees to provide specific details of tax reform legislation and resolve many open issues, including effective dates for the proposals. Administration officials and Republican Congressional leaders say their goal is to enact tax reform in 2017.

Read Full Article


Stefan Schmid
Corporate Tax Switzerland
Tel. +41 58 792 4482
Send E-Mail

Monica Cohen-Dumani
Corporate Tax Switzerland
Tel. +41 58 792 9718
Send E-Mail

Michael Ruckstuhl
Corporate Tax Switzerland
Tel. +41 58 792 1494
Send E-Mail

Worldwide Tax Summaries – Corporate Taxes 2017/2018

We are delighted to inform you that the 2017/2018 edition of PwC’s Worldwide Tax Summaries on Corporate Taxes is now available online.

The new eBook (ePub and iBook formats) can be found at for use on most digital devices (e.g. desktops, laptops, tablets, smartphones). To view an ePub on your device, please ensure you have an app installed that can read the ePub format. Compatible apps should be available in your device’s app market or app store.

It is further worth noting that the fully mobile Worldwide Tax Summaries website, which is kept current throughout the year and covers corporate and individual taxes in over 150 countries, including quick charts, can be found at

Are you interested in other information and news?

PwC has a lot to share with you, in the form of tax alerts, breaking tax news, newsletters, etc.

However, to make sure you only get what you want respectively your personalised news, we ask you to make your choices on the following PwC links (German, English, or French).

DE –

EN –

FR –

China Economic and Policy Updates Q2 2017

Here are some highlights of the macro economic and policy updates:

  • Services and consumption continued to be notable drivers of economic growth while fixed asset investment growth continued to decline.
  • The International Monetary Fund (IMF) has upgraded its economic forecast for China to 6.7% and 6.4% for 2017 and 2018 respectively. This is the third time this year that the IMF has upgraded China’s economic forecast.
  • Chinese regulators have expressed concerns about overseas acquisitions by Chinese firms in certain sectors, underlining the government’s new drive to rein in offshore spending by some of the country’s biggest companies.
  • China’s ballooning debt, while a concern, is primarily domestic in nature. Yet, it is unlikely to lead to a financial crisis as the Chinese government has significant fiscal buffer to keep things under control.

Download Full Report

To read more of our latest articles from China Economic Quarterly:

Click Here

“Royalty Restrictions“ in Germany

11 July 2017

Germany has recently introduced new rules that will restrict the tax deductibility of related-party cross-border royalty payments if these payments are benefiting from a low taxation triggered by a harmful preferential tax regime in the country of the recipient.

Based on these new rules, such royalty expenses incurred after 31 December 2017 will no longer be fully deductible in Germany if the relevant income is subject to an effective tax rate of less than 25%:

In detail

For example, if the royalty income is subject to a preferential 10% effective tax rate, 60% of the royalty payments would not be deductible at the German taxpayer level.

However, if a recipient of cross-border royalty payments is subject to the regular tax rate (i.e. no preferential tax regime applies), the royalty restriction rule is not applicable, even if the effective tax rate is less than 25%.

Furthermore, patent box regimes which comply with the OECD “nexus” approach (i.e. under foreign law the preferential tax rate is only granted following an OECD-compliant “nexus” approach) are exempt from the new rule. A patent box of this kind is likely to be introduced in Switzerland in the context of tax package 17 (former corporate tax reform III).

It should however be noted that tax package 17 and therefore an
OECD-compliant Swiss patent box will probably not be introduced before 2020. Consequently, German royalty payments incurred between 1 January 2018 and the introduction of such a patent box in Switzerland could be subject to the new German royalty restriction rule if such royalties benefit from a Swiss preferential tax regime. The following regimes in Switzerland should be investigated in particular to establish whether or not they qualify as harmful preferential tax regimes:

  • Nidwalden IP Box
  • Mixed companies
  • Holding companies
  • Principal companies

An investigation into the impact of the new German limitation rules is recommended in order to determine their impact and to decide whether restructuring should be conducted before 1 January 2018.

In summary, there is still some uncertainty about how the new rules will be interpreted and applied. However, for now it can be assumed that all Swiss preferential regimes may potentially cause issues under the German royalty restriction rule.

There are, however, certain planning ideas which can help mitigate and/or reduce such issues. These solutions may depend on the very specific circumstances of your group and we advise you to have them analysed by your PwC tax consultant on a case-by-case basis.

For a more detailed discussion of how this might affect your business, please contact:

Armin Marti
Partner, Leader Corporate Tax
Tel. +41 58 792 43 43

Stefan Schmid
Partner, Tax & Legal
+41 58 792 44 82

Roman Brunner
Partner, Tax & Legal
+41 58 792 72 66

Urs Brügger
Partner, Tax & Legal
+41 58 792 45 10

Reto Inauen
Senior Manager, Tax & Legal
+41 58 792 42 16

Repaving the ancient Silk Routes

China’s Belt and Road (B&R) initiative is a global connectivity program focused on infrastructure development across East and Central Asia, the subcontinent, Africa and Europe. It goes beyond roads and ports, to include airports, power plants, pipelines, waste and water management facilities and telecommunications. These are supported by extensive ecosystems, providing opportunities for international professional and project management expertise.

Demand for global expertise

B&R projects are open to all countries beyond the 65 developing nations along the 6 economic corridors. It will have an impact on a population of about 4.4 billion and one third of the global economy. The size and complexity of B&R projects means that enterprises from both China and along the B&R will seek to partner with foreign companies which have globally recognized skills and capabilities, as well as experience in managing complex international engagements.

However, identifying the right B&R project and preparing for success raises a number of complex questions:

What are the risks associated with B&R projects?

  • Geopolitical risks: Changes in political regimes or in bilateral relations between countries involved in B&R during a project’s lifespan.
  • Funding risks: Funding gaps and host countries’ varied ability to repay loans, exacerbated by higher capital and debt service ratios of B&R projects.
  • Operational risks: A lack of experience in delivering and managing complex transnational projects, leading to delays and cost overruns.

How do I evaluate which B&R project to be involved in?

  • Commercial viability assessment: Conduct realistic economic modelling to establish the business case viability of a B&R project.
  • Review maturity of the infrastructure ecosystem: Assess the maturity and future plans of the surrounding infrastructure.
  • Establish a portfolio fit: Evaluate how the proposed B&R project complements the company’s existing infrastructure portfolio and overall growth objectives.

Which factors will help me position for success?

  • Contingency strategies: Establish contingency plans to manage short term disruptions and plan for lengthy project lifespans.
  • Align with governments: Build strong and respected relationships with local authorities and align with national interests in order to effectively navigate political pressure points.
  • Establish trusted partnerships: Work with local companies with proven track records and established connections with key local stakeholders.
  • Adopt a risk-sharing approach: Establish trust among all stakeholders to dilute the burden of shouldering potential risks.



Felix Sutter
Assurance Partner
Tel. +41 58 792 2820

China Economic Quarterly May 2017

What to expect from Made in China 2025 and China’s first Belt and Road Forum

The China Economic Quarterly is a market outlook prepared on a quarterly basis by PwC to share the latest economic and policy updates. In this third quarter update, the overview of China’s macro trends are followed by a summary of the main policy developments and hot topics of interest such as policy updates for a new economic zone Xiong’an New Area, insights into the “Made in China 2025” initiative and the Belt and Road Forum for International Cooperation to be held in Beijing on 14 and 15 May 2017.

China’s economic growth in the first quarter of 2017 delivered a much better result than market expectations. GDP increased by 6.9% year-on-year – the highest growth over the past five quarters, thanks to more pro-active fiscal stimuli and continued expansionary monetary policies.

Here are some highlights of the report:

  • The primary, secondary and tertiary (services) industries all grew, with services as a share of GDP reaching a new high of 56.6% and contributing 61.7% to overall economic growth.
  • In the first quarter of 2017, China maintained its expansionary monetary policy. The increments of Aggregate Financing to the Real Economy (AFRE) were RMB 6.93 trillion, which was RMB 226.8 billion more than the same period last year.
  • In a bid to address severe traffic congestion and air pollution in Beijing, the Chinese government announced a historic plan on 1 April 2017 to create Xiong’an New Area, a new economic zone about 100 km southwest of Beijing, with an initial area of around 100 square km and eventually expanding to nearly three times the size of New York City.
  • “Made in China 2025” is China’s first ten-year plan for manufacturing expansion and upgrading and has attracted criticisms for being “problematic” with the potential to be used to “discriminate against foreign firms in favour of Chinese competitors”.

Download PDF


china_economic_quarterly_nov2016To read more, you can access the latest issue of China Economic Quarterly by clicking the following links:

Hong Kong: