Staying Ahead of Regulatory Changes - with German Centre and German Chamber

Datum des Events:

On November 5, 2024, WZR China conducted an engaging and insightful sharing together with German Chamber and German Center, focused on helping companies prepare for regulatory inspections under China's "Double Random and Public Disclosure" policy. The event, led by Managing Partner of WZR China Dr. Florian Kessler and Ms. He Xin, covered critical aspects of regulatory compliance, from labor laws and tax audits to cross-border payments, customs, and marketing compliance.

 

In each section, Dr. Florian Kessler and Ms. He Xin presented checklists developed by relevant authorities, covering the main compliance areas used for their random inspections. Those checklists serve as valuable resources, enabling companies to conduct initial self-inspections based on the checklists and proactively address potential risks. With those checklists, companies can ensure that they understand the key compliance expectations and identify areas needing improvement.

 

Dr. Florian Kessler and Ms. He Xin also shared several case studies to highlight practical applications under the "Double Random and Public Disclosure" policy.

 

For example, in a labor law inspection case, the HRSSB focused the on-site random inspection at a manufacturing company in Tianjin on the protection of female employees. Two inspectors of the HRSBB matched the HR files of pregnant employees with the attendance records of these employees. They identified that pregnant female employee, who was 7 months pregnant, worked overtime and three breastfeeding employees worked night shifts. The company was penalized despite the employees' explicit request to work overtime and night shifts, emphasizing that compliance with labor laws cannot be overridden by individual agreements.

 

In a tax inspection case, the company received a phone call from the tax authority. The focus of the random inspection were service fees paid to third party providers to review the authenticity of the service fee and assess its deductibility. The company submitted a self-inspection report to the tax authority, covering details such as the reason for the purchase of the respective services, contract records and time of payment. This case underscored the importance of thorough record-keeping and proactive documentation in preparing for tax inspections. 

 

In addition to the sharing of Dr. Florian Kessler and Ms. He Xin, the interactive format of the event encouraged participants to share their own experiences with inspections, which brought valuable perspectives into the sharing. One notable insight were conflicting interpretations of the regulatory framework during random inspections conducted across different authorities. 

 

Based on the discussions and case studies, Dr. Florian Kessler and Ms. He Xin provided participants with practical recommendations to prepare for random inspections in advance:

 

  • Conduct regular self-checks, using the provided checklists to identify and address potential compliance risks.
  • Maintain detailed and organized documentation for all transactions, agreements, and employee arrangements, which can be crucial in responding to inspections.
  • In case of inspections, prepare a rectification plan based on specific requirements of the relevant authorities, designating responsible personnel to manage communications with authorities and address any issues swiftly.

The sharing concluded with a quiz that allowed participants to test their knowledge on the topics covered. In response to the strong interest shown, WZR China has offered to provided participants with checklists covering the main regulatory areas and a template for a service contract to be concluded with companies’ third-party service providers.

 

Overall, the event was a great success, providing participants with the tools and knowledge necessary to navigate the inspection under the "Double Random and Public Disclosure" policy. For those seeking further assistance, WZR China will be available to support companies in preparing for inspections and enhancing compliance practices.