The State Administration of Foreign Exchange (SAFE) of China in July issued the Guidelines for the Administration of Foreign Exchange Under Service Trade under Circular 30 (effective September). Circular 30 simplifies foreign exchange rules for the service industry whilst abolishing numerous previous SAFE regulations.
The Guidelines provide that the State does not impose restrictions on international payments in services trade as long as the payments are based upon genuine and lawful transactions. Nor are banks required to inspect and verify the transaction documents for receiving and paying foreign exchange under services trade where the value of such funds is US$50,000 (or equivalent) or less. However, where the nature of the funds is unclear, banks should request the submission of transaction documents. Likewise, where the funds exceed US$50,000 or equivalent, transaction documents must be submitted to banks for approval before the transaction can be processed. In the case of dividend payments, for example, the bank must verify the annual financial audit report issued by a certified public accounting firm, the board resolution on profit distribution, and the company's most recent capitalverification report.
