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TREATMENT OF HONG KONG, MACAO, AND TAIWAN INVESTMENTS UNDER CHINA'S NEW FOREIGN INVESTMENT LAW


13 May 2020 | Investment, HMT investments | Written by Dr. Richard van Ostende | Reading time: 2 minutes


Per 1 January 2020 China’s new Foreign Investment Law entered into effect, replacing the 1979 Law on Sino-Foreign Equity Joint Ventures, the 1986 Law on Wholly-Foreign-Owned Enterprises and the 1988 Law on Sino-Foreign Contractual Joint Ventures simultaneously.

Prior to enactment of the new Law, China’s three foreign investment laws categorized investments from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan as foreign investment.

On 15 March 2019, during the second session of the 13th National People’s Congress (NPC) the Foreign Investment Law was approved. At the time uncertainty among investors from Hong Kong, Macao, and Taiwan on the treatment of their investments existed as the Foreign Investment Law does not specify whether it applies to HMT investments.

On 31 December 2019, the Detailed Implementing Regulations of China’s Foreign Investment Law have finally been promulgated by the State Council. The regulations clarify that

  • Investments made into Mainland China from Hong Kong and Macao Special Administrative Regions, unless otherwise specified by laws and regulations or provisions of the State Council, are governed by China’s Foreign Investment Law and detailed implementation regulations.

  • Investments made into Mainland China from Taiwan are subject to China's Investment Protection Act for Taiwan Compatriots and its detailed implementation regulations. For matters not covered, the Foreign Investment Law and tdetailed implementation regulations shall apply.


SOURCES

  • State Council. (2019). Foreign Investment Law of the People’s Republic of China (Adopted at the Second Session of the 13th National People’s Congress on March 15, 2019).

  • State Council. (2019). Implementation Regulations of the Foreign Investment Law of the People’s Republic of China.


The information in this article is intended for general information on the subject matter. The content of this article is not intended to replace professional advice on the subject matter in relation to your specific circumstances.

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