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.

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CONTACTS

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

Ernst & Young Tax Services Limited, Hong Kong

• Jane Hui
  jane.hui@hk.ey.com
• Becky Lai
  becky.lai@hk.ey.com

Ernst & Young Ernst & Young (China) Advisory Limited, Shanghai

• Walter Tong
  walter.tong@cn.ey.com
• Vickie Tan
  vickie.tan@cn.ey.com

Ernst & Young Ernst & Young (China) Advisory Limited, Beijing

• Henry Chan
  henry.chan@cn.ey.com
• Martin Ngai
  martin.ngai@cn.ey.com
• Andrew Choy
  andrew.choy@cn.ey.com

Ernst & Young Ernst & Young (China) Advisory Limited, Shenzhen

• Clement Yuen
  clement.yuen@cn.ey.com

Ernst & Young LLP (United States), China Tax Desk, New York

• Min Fei
  min.fei@ey.com
• Andrea Yue
  andrea.yue1@ey.com
• Vickie Lin
  vickie.lin@ey.com
• Ryan Lu
  ryan.lu@ey.com
• Sherry Cui, Transaction Tax
  sherry.cui1@ey.com

Ernst & Young LLP (United States), China Tax Desk, Chicago

• Lucy Wang
  lucy.wang1@ey.com

Ernst & Young LLP (United States), China Tax Desk, San Jose

• Diana Wu
  diana.wu@ey.com

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

• Chris Finnerty
  chris.finnerty1@ey.com
• Kaz Parsch
  kazuyo.parsch@ey.com
• Bee-Khun Yap
  bee-khun.yap@ey.com

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ATTACHMENT

PDF version of this Tax Alert