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China’s New Measures for Tax Credit Restoration Effective January 1

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  • China’s eligible corporate taxpayers seeking to restore their tax credit can apply to tax authorities beginning next year.
  • New measures encourage corporate taxpayers to proactively fix their tax incompliance record.
  • Corporate taxpayers are advised to leverage the policy to maintain a good tax credit rating to access tax preferential policies and convenient tax-related services.

On November 7, 2019, China’s State Administration of Tax (SAT) released the Announcement on Matters Related to Tax Credit Restoration (SAT Announcement [2019] No.37), effective from January 1, 2020.

Thus, beginning next year, corporate taxpayers included in China’s tax credit management system can apply for tax credit restoration by correcting tax irregularities and making credit commitments.

Who can apply for tax credit restoration?

According to the announcement, eligible corporate taxpayers applying for tax credit restoration must satisfy one of the following three conditions:

  • Condition I: The enterprise has now completed all tax declarations, tax payments, and data filing, after previously failing to do so, within the statutory time limit;
  • Condition II: The enterprise that previously failed to pay or pay in full the taxes owed, late fees, and fines and was categorized as a class-D credit taxpayer (not due to a crime), has now paid or made up the payment within 60 days upon the statutory payment deadline; or
  • Condition III: The enterprise has fulfilled all corresponding legal obligations, and thereby the tax authority has lifted its ‘abnormal’ status.

Under these three conditions, the announcement specifies 19 specific cases (Annex 1 of the Announcement), including:

  • 15 cases under Condition I

In these 15 cases, taxpayers failed to make tax declaration, tax payment, data filing with the tax authorities, etc. within the prescribed time limit, and thus were punished by point-deduction.

  • 4 cases under Condition II and III

In these 4 cases, taxpayers failed to pay or pay in full the taxes, late fees, and fines, or were judged to be an abnormal household, and thus were punished by being rated as a class-D taxpayer.

In each of the cases, the announcement (Annex 1) set out the criteria and methods for restoring tax credit (refer to the table below for details).

China-tax-credit-restorationHow to apply for tax credit restoration?

The applicant may submit the application form (Annex 2 of the Announcement) to the relevant tax bureau and make a commitment that the irregularities have been corrected. The tax bureau will then, within 15 workdays, complete the audit and inform the applicant of the result.

After the completion of the tax credit repair, the taxpayer will be subject to the corresponding tax policies and administrative measures based on the recovered tax credit rating. The previously applicable tax policies and measures shall not be retroactively adjusted.

If the tax authority discovers that the taxpayer failed to fulfill the promise of credit repair and applied for tax credit repair by submitting false materials, it will cancel the completed tax credit repair after verification and deduct five points from the offender’s credit score for each violation in the tax credit annual evaluation.

Why businesses in China need to take their tax credit rating seriously

Since April 2016 – when China first introduced the tax credit repair mechanism – until September 2019, a total of 1,650 tax offenders have been removed from the taxation blacklist bulletin board, according to the SAT.

As China constructs a new corporate social credit supervision mechanism, corporate credit, including tax credit rating, is of greater significance to enterprises.

Tax credit rating – currently categorized as A, B, M, C, and D – has become an important reference for enterprises when they interface with tax authorities and seek access to tax preferential policies. It also affects how they conduct business with other enterprises and individuals – taxpayers showing a poor tax credit rating will be avoided.

Chinas-Tax-Credit-Ratings-for-Corporate-Taxpayers

Corporates are highly advised to keep track of their tax credit ratings and the reasons for their poor rating (if any), refer to the announcement and seek professional advice to make up for the credit loss.


About Us

China Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in DalianBeijingShanghaiGuangzhouShenzhen, and Hong Kong. Readers may write to china@dezshira.com for more support on doing business in China.

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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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