2016.12.06 SUN, Jiangang (Roy)、Xinjie Li、Kan CHEN
The Ministry of Public Security of the People's Republic of China (the “PRC”) published the Guidelines for Registration of Representative Institutions and Record-Filing of Temporary Activities of Overseas Non-Governmental Organizations (the "Guidelines") on its website on November 28, 2016, which is the first supporting set of regulations after the promulgation of the Law of the People's Republic of China on the Management of Activities of Overseas Non-Governmental Organizations within the Territory of China (the "NGO Management Law"). The Guidelines follow the principles and provisions of the NGO Management Law, and build upon the registration and filing system, including specifying the processes and application documents, providing some standard forms of application documents, etc. (see discussions in Part I for details). That being said, the Guidelines are not clear enough on certain points , for implementing the NGO Management Law and guiding overseas non-governmental organizations (the "Overseas NGOs") to draw any premature conclusions (see discussions in Part II for details).
Part I: Elaborations and Highlights
The Guidelines aim to elaborate the requirements, procedures and documents in relation to the registration of a representative office and the record-filing of temporary activities of Overseas NGOs in the PRC, which may be summarized as follows, mainly:
1. The Guidelines specify the procedures and the required documents for setting up a representative office of an Overseas NGO in the PRC. An Overseas NGO shall first acquire the approval of its professional supervisory authority before it registers the PRC representative office with a competent registration authority. In addition, the registration authority reserves its power to assemble a panel of experts to conduct further assessment before approving the registration.
2. The Guidelines provide for a supervisory model of "record-filing beforehand and reporting afterwards".
(1) For a representative office of an overseas NGO, it shall submit its activities plan every year before December 31for the following year to its professional supervisory authority, and after obtaining the approval of its professional supervisory authority, it shall then submit the same materials to the registration authority. In addition, a representative office shall submit its summary report of completed activities every year before January 31 for the previous year to its professional supervisory authority, and after the approval of its professional supervisory authority, it shall then submit the same materials to the registration authority.
(2) For the record-filing of temporary activities, an overseas NGO shall conduct record-filing with the registration authority via its Chinese partner fifteen (15) days before the proposed temporary activities, and shall submit its summary report of completed activities, including the use of funds and other important information, to the registration authority within thirty (30) days after the conclusion of the temporary activities.
3. It is confirmed that the Overseas NGO Management Offices under public security authorities of the provincial people’s governments will serve as the registration authorities for the representative offices and the temporary activities of Overseas NGOs. In Shanghai, for example, according to news reports, it is likely that the Overseas NGO Management Office will be set up at the office venue of the Exit-Entry Administration Bureau of Shanghai Public Security Bureau.
4. The Guidelines make it clear that representative offices of Overseas NGOs may conduct trans-provincial activities, provided that the regions where their activities are carried out shall be consistent with their registrations. Meanwhile, the Guidelines also allow an Overseas NGO to set up two or more representative offices in the PRC, provided that the regions covered by each representative office shall not overlap.
5. Under the Guidelines, if a representative office of an Overseas NGO carries out activities in multiple areas, it is not required to obtain approvals from the professional supervisory authority for each area, and it is permissible to make a single application at the professional supervisory authority covering its main activity area.
6. The Guidelines authorizes provincial Overseas NGO Management Offices to formulate provincial Guidelines in accordance with local practices. At the same time, the Overseas NGO Management Office of Ministry of Public Security released its hotline (010-58186465 and 010-58186464) for answering public consultations.
Part II: Points to be clarified
Despite the elaborations and highlights mentioned above, certain content of the NGO Management Law and the Guidance still appear to be ambiguous, and may cause uncertainties in practice, for instance:
1. The Catalogue of Activity Areas and Projects and Catalogue of Professional Supervisory Authorities of Overseas Non-Governmental Organizations within the Territory of the PRC (2017) (the "Catalogue ") has not been promulgated.
The Guidelines make it clear that an Overseas NGO shall first apply for the approval of a professional supervisory authority in accordance with the Catalogue, based on its main activities, if the Overseas NGO wants to set up a representative office in the PRC. However, the Catalogue is still under discussion and has not been promulgated. Except for the general provisions under the NGO Management Law (i.e., Overseas NGOs may engage in activities for public benefit in areas such as economy, education, science, culture, health, sports, environmental protection, poverty, and disaster relief.), it is unknown how to define these activity areas, and what the corresponding professional supervisory authority would be. As 2016 comes to an end, some Overseas NGOs are considering making assumptions about whether their activities in the PRC are doable or consistent with the NGO Management Law, and some of them wish to communicate with their professional supervisory authorities in advance, to better prepare for their activities in the PRC in 2017. It seems that these Oversea NGOs may have to wait for the promulgation of the Catalogue.
2. Requirements for the track records of an Oversea NGO are not clear.
Both the NGO Management Law and the Guidelines require that an Overseas NGO have been established overseas for no less than two years and have conducted “substantial activities”, if it wants to set up a representative office in the PRC. However, the NGO Management Law and the Guidelines are silent on the criteria of “substantial activities”. As a result, for an Overseas NGO focusing on the PRC, it is not clear whether an Overseas NGO could satisfy the above requirement if it conducted substantial activities only within the PRC, or if after the NGO Management Law goes into effect, filings of temporary activities via the cooperation of Chinese partners in the PRC could satisfy the requirement of “substantial activities”.
3. The supporting tax provisions need to be clarified.
The Guidelines require that a representative office of an Overseas NGO shall apply for tax registration after its establishment. But the Guidelines does not mention how a representative institution shall pay taxes, what kind of taxes it shall pay, what the tax rates are applicable, and whether the relevant provisions in relation to permanent representative institutions of foreign enterprises will apply, and for cooperating with an Chinese partner to conduct temporary activities by an Overseas NGO, whether such Overseas NGO shall pay taxes and whether its Chinese partner is required to withhold and collect taxes. It is very likely that after the NGO Management Law goes into effect, the PRC tax authorities may first levy taxes on the representative offices of Overseas NGOs in accordance with the provisions for permanent representative institutions of foreign enterprises. Based on the practices of representative offices of Overseas NGOs, the PRC tax authority may then gradually formulate specific provisions.
4. The approval documents for record-filing of temporary activities are not clear.
For record-filing of temporary activities of an Overseas NGO, the Guidelines require that its Chinese partner shall submit the “approval documents obtained by the Chinese partner” as one application document. According to our experience, such “approval documents obtained by the Chinese partner” may refer to (1) the establishment documents of the Chinese partner; and/or (2) the approval documents obtained by the Chinese partner in connection with the contemplated activities that an Overseas NGO and its Chinese partner intend to conduct jointly, subject to further explanation and clarification by the registration authorities.
5. The scope of exceptions is not clear.
(1) Both the NGO Management Law and the Guidelines indicate that overseas schools, hospitals, natural sciences and engineering technologies research institutes, or academic organizations wishing to engage in exchanges and cooperation with their counterparts in China shall follow the relevant PRC provisions and the NGO Management Law shall not apply. However, the NGO Management Law and the Guidelines do not specify the scope of “relevant provisions of the State”. For instance, the scope of natural sciences and engineering technologies could be very broad, and the criteria for judgment may vary, which makes it difficult for an Overseas NGO to make assumptions about whether or not its activities in the PRC shall fall under the NGO Management Law.
(2) It remains unclear whether it is legitimate and if so, what registrations are needed, for an Overseas NGO which wants to conduct activities which are not for public benefit.
6. The impact on existing representative offices of Overseas NGOs is not clear.
Before the promulgation of the NGO Management Law, certain Overseas NGOs have registered their representative offices with the Civil Affairs Departments, Administrations for Industry and Commerce, etc. in different legal forms. It remains unclear what these existing representative institutions shall do after the NGO Management Law and the Guidelines go into effect, and whether their existing registrations will continue to be valid.
In summary, although the Guidelines provide for many procedural details based on the NGO Management Law, there is not enough information to answer certain practical questions with respect to the registration of representative offices or filing of temporary activities. We hope that the upcoming Catalogue or the press conference held by relevant authorities will provide further answers and explanations. It is very likely that certain practical questions may be subject to ongoing review and corrections after the implementation of the NGO Management Law, the Guidelines and the Catalogue. We will continue to monitor this situation and update you with more information as it becomes available.