On July 18th, 2013 the State Administration for Foreign Exchange (SAFE) issued a Notice on foreign exchange administration concerning non – trade current account transactions (Notice No. 30) aimed at simplifying the current legislation on currency conversion supervision in international transaction. Such Notice entered in force on September 1st, 2013.

In the past, all currency conversion in connection to transactions above USD 50,000 should have been pre- approved by SAFE prior to be handled by the bank. With this new Circular, however, all non – trade transaction listed in the Notice (such as service fees, interests, technology transfer fees, royalties, dividends, expenses for representative offices, etc.) carried out from current accounts (i.e. the accounts that are not defined as “capital account”) do not require SAFE approval anymore.

The above shall not means that SAFE had relaxed its control over cross – country currency flow: in fact, in general for each transaction above USD 50,000 SAFE still requires submission of documents showing the existence of an actual transaction between the contractual parties, and not a mere transfer of money in or out of China. Contrary to prior practice, however, the amount of documents to be submitted have been reduced, thus simplifying the procedure, and, in order to avoid that companies will effect several payments below USD 50,000 for the same transaction, so to avoid the document submission requirements, the Notice sets specific penalties (in general up to 30% of the total amount to be remitted, but, for serious cases, it can be well above that limit) for such eventuality.

Finally, if certain requirements are satisfied, a Chinese enterprise (either Chinese or Foreign invested) may be allowed to utilize their off – shore bank accounts to receive payments for non – trade transaction from foreign business partners.

SAFE shall maintain a constant supervision of all cross – border money flow in order to verify the existence of anomalies, in which case an enterprise may be subject to investigation and to provide explanatory proofs of the anomalies.

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