Fan Zhang Raises Key Compliance Questions at Second ICC Working Group Meeting on EU Foreign Subsidies Regulation
On February 7, 2025, the International Chamber of Commerce (ICC) convened the second meeting of its Working Group on the EU Foreign Subsidies Regulation (FSR).
The meeting focused on addressing practical challenges related to the application of disclosure obligations under Regulation (EU) 2022/2560.
Lawyer Fan Zhang, Director of the Foreign Legal Affairs Department at JINGSH Chengdu, participated in the meeting as the member of the Working Group. During the session, she shared her professional insights and raised critical compliance questions regarding the interpretation of financial contributions (FFCs) for FSR notification purposes.
Compliance Issues Highlighted by Fan Zhang
Fan Zhang’s intervention focused on the challenges of interpreting the scope of disclosure for financial contributions under Form-PP (Section 3.3 and Table 1) and Form-CO (Section 5.3 and Table 1), particularly for contributions equal to or exceeding EUR 1 million that are not classified as risk FFCs under Article 5(1)(a)-(e) of the Regulation.
She posed important questions regarding:
- How to define and differentiate “tax holidays”from measures of “general application”;
- How to distinguish between benefits that are limited to certain sectors, regions, or types of undertakingsand those that are broadly applicable.
Drawing from comparative examples, Fan Zhang illustrated the challenges using:
- UAE Corporate Tax Law, including 0% tax rates for Qualifying Free Zone Persons and thresholds under the 2022 Federal Decree Law;
- Chinese tax exemptionsunder the Corporate Tax Law and Foreign Investment Law, analyzing whether general legislative exemptions should be considered automatically excluded from FSR disclosure, or treated as financial contributions requiring notification.
Broader Concerns for Fair Competition
Fan Zhang also highlighted broader dilemmas in the current FSR framework, noting that:
- Companies engaged primarily in outward international business(such as exporters) are more likely to meet notification thresholds;
- Meanwhile, inward-focused businesseswith little external trade exposure may face less regulatory scrutiny, potentially impacting long-term market quality and fair competition within the EU.
Her observations stressed the need for careful interpretation to maintain balanced regulatory enforcement and ensure that FSR compliance obligations remain proportionate and equitable across different business models.
Ongoing Engagement and Leadership
“Clarifying how financial contributions should be categorized under the FSR is vital to ensure compliance certainty for global businesses,” said Lawyer Fan Zhang.
“Through continuous dialogue, we aim to support fair competition and regulatory transparency across international markets.”
As a member of the ICC Working Group, Fan Zhang remains actively engaged in the development of regulatory interpretations, contributing thought leadership to the evolving international compliance environment.
