The People's Bank of China recently released a notice with
new requirements for the cross-border cash pooling of RMB by
multinationals. This new notice relaxes operating income
requirements for Chinese domestic group companies and overseas
group companies that wish to participate in the pooling. In
addition, a significant increase in the cap on net cross-border RMB
inflow gives multinationals more freedom in pooling foreign RMB
In view of these recent developments, we recommend that
companies interested in setting up or making amendments to an RMB
cash pool closely consult with both the local People's Bank of
China and their local commercial bank.
On 5 September 2015, the People's Bank of China released its
Notice of the People's Bank of China on Further
Facilitating Two-way Cross-border Renminbi Cash Pooling by
Multinational Corporations. This "Circular 279″
updates Circular 324, the original rules that were issued on 1
November 2014 (see previous
In context article).
Compared to Circular 324, Circular 279 relaxes certain operating
income requirements for Chinese domestic group companies and
overseas group companies that wish to participate in an RMB cash
pool. The operational period required for both domestic and
overseas group companies has been reduced from three years to one
year. The aggregate operating revenue of the domestic group
companies in the previous year must now be at least RMB 1 billion
instead of RMB 5 billion. For overseas group companies, this
requirement has been reduced from RMB 1 billion to RMB 200
Circular 279 sets a new cap on the net cross-border RMB inflow
at 50% of total own funds in the cash pool. The 50% cap is an
initial ceiling and may be adjusted in the future depending on the
economic situation in China and the need for controlling RMB
inflow. As for the RMB outflow, there is still no cap on it.
As a consequence of Circular 279's less stringent
requirements on operating income, Chinese domestic group companies
and overseas group companies can now more easily participate in the
cross-border RMB cash pool of a multinational. The increased cap on
the net cross-border RMB inflow of Circular 279 also gives
multinationals more freedom in pooling foreign RMB funds.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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