Income Tax
Foreigner invested
enterprise engaged in production with an operation term over
10 years will be deducted or exempted for income tax within
the 2 years from the year when it starts to make profit, and
cut half for income tax from the third year till the fifth
year. Foreign Investment enterprise of the state encouraged
category in the middle or west China will enjoy a deducted
rate of 15% instead of due income tax for another 3 years
after the preferential tax policy for the first 3 years.
With application
to and approval from tax office concerned, foreigner invested
enterprise engaged in agriculture, forestry, animal husbandry
will enjoy a 15% to 30% deduction of due income tax for 10
years after the preferential exemptions duration which is
stipulated in the clause 8 of the tax law.
Foreign investor
that reinvest with profit made from invested enterprise or
that increases registration capital or sets up other enterprises
which will be run no less than 5 years with the made profit
will enjoy a 40% drawback of his paid income tax for the reinvested
enterprise against application to and approval from tax office
concerned. Those that further sets up or enlarge production
for export or high-tech enterprise which will run no less
than 5 years will enjoy a total or partial refund of paid
enterprise income tax accordingly to rules by the state consul.
Foreigner invested
new and high-tech enterprise that are deemed by the state
council within high-new-tech economic development zones will
enjoy preferential income tax rate at 15%.
Foreigner invested
export enterprise will at expiration of tax exemption enjoy
a half cut of income tax under condition that its export reaches
70% and more of its total product value and is certified by
foreign trade administration concerned with approval from
taxation organs accordingly to the tax law. After the half-cut,
should the payable tax be lower than 10%, it will be levied
up to 10%.
Foreigner invested
new and high-tech enterprise at expiration of tax exemption
will enjoy a half-cut of in come tax due by the tax law for
next 3 years, should it be deemed and certified as still a
new and high-tech enterprise by foreign trade administration
concerned with and approval from taxation organs. After the
half-cut, should the payable tax be lower than 10%, it will
be levied up to 10%. Foreigner invested production enterprise
located in old township area of Taiyuan , will enjoy an income
tax at 24% which is reduced from the due one also.
Foreigner invested
productive enterprise engaged in following trades with approval
from headquarter of the state tax bureau will enjoy the income
tax rate of 15%: 1, technology integral, knowledge condensed
ones; 2, foreign investment amounting up to over 30 million
USD with long term of fund recovery; 3, projects of energy,
transportation and harbor construction.
Any foreigner invested
enterprises within China 's territory, that purchase China
home made equipment with its capital can get 40% of the cost
off set with drawback from the excessive part of income tax
arising in the year of the purchase against that of last year.
This is to carry out on137 at compliance with promulgations
of Foreign Investment Enterprise Guidance Catalogue in Notification
on Adjustment of Equipment Import Duty by the State Council
No. Guofa[ 1997]37. Should the enterprise invested belong
to categories of the encouraged or limited B, those covered
by the following promulgation will be ruled out "Catalogue
of Import Commonalities beyond Duty-Exemption by Foreign Investment
Enterprise No. Guofa[1997]37"
In case of a cost
increment for technology development within China 's territory
at or over 10% more than that of the year before, this foreigner-invested
enterprise will be deducted for a 50 % of taxable income amount
that year. Should the 50% of the cost that year be more than
the payable income that year, the enterprise is allowed to
be deducted for an amount no more than the taxable income
amount. The rest part will not be calculated for deduction
in the year or years after.
Local income tax
With application
to and approval from tax office concerned, foreigner invested
productive enterprise with no less than l0- year operation
term will be exempted for local income tax for Local income
tax years; while, the exemption will be i0 years for those
that engage in energy, transportation coal in-depth processing
syntheses utilization, mechanic-electric machinery, metallurgy,
chemical industry, textile, building material, foodstuff,
agriculture, forestry, animal husbandry, urban infrastructure
projects, high-tech, export, and projects for technical renovation
existing industries.
Foreigner invested
enterprise engaged in infrastructure, hightech, agriculture,
forestry, animal husbandry, export product projects, and projects
for technical renovation will be exempted for local income
tax and urban real estate tax for 10 years starting from its
profit-making year. Land use transfer fee charged to foreign
invested enterprise under same condition is lower than that
in costal areas; while, which is even lower for those technology
condensed and largely invested ones.
Value added
tax
Any trail products
planned by province new projects will enjoy 25% drawback of
value added tax paid from start of selling. Procedure is:
application by enterprise to local Economic Committee or (Science
Committee) and filling as required the Approval Form for Drawback
of Value Added Tax attached with photo copy of the Value Added
Tax Paid Certificate for submittals to the state tax office
at or above county level for approval. The drawback will be
accounted as budget for 3 items of science and technology
cost from local finance administration.
Business tax
Exemption of business
tax will be given to entities and individuals (including foreigner
invested enterprise, research center, foreign enterprise or
individual) that engage themselves in technology transfer,
consultation of technical matters, technology development
and technological service. Exemption of business tax will
be given to those foreign enterprises that transfer technology
into China 's territory under condition that their technology
is advanced or price is preferential after obtaining approval
from taxation organization of the state.
Pre-levied
income tax
Profit made by foreigner
from his invested enterprise is free of the item; Income from
interest out of the loans by international financial organs
to government of China and China 's state run banks are free
from the item. Income from interest out of the loans by foreign
banks to China 's state run banks are free from the item.
Excise tax on providing concession of specific, essential
technique for scientific research, exploration of energy,
development of transportation and agriculture, forestry and
animal husbandry or development of significant technology
shall be levied at the rate of 10% with condition against
approval by respective taxation organs of the state council.
According to State Notification No. Guofa [2000] 37, starting
from Jan. 1st, 2000 an enterprise income tax at a deducted
rate of 10% shall be levied on interest, rent, concession
providing, or other income made by foreign enterprise that
have no organs, entities or site established within China's
territory. The same rate of income tax shall also be levied
on those foreign enterprises that do have the above-mentioned
entities, however, their income of the above mentioned items
have nothing to do with their establishment in China .
Real
estate tax
Exemption of real
estate tax will be given to foreigners investing in energy,
transportation, coal in-depth processing, syntheses utilization,
mechanic-electric machinery, metallurgy, chemical industry,
textile, building material, foodstuff, agriculture, forestry,
animal husbandry, urban infrastructure projects, high-tech,
export, and projects for technical renovation of existing
industries and so on encouraged categories. Foreign investors
are encouraged to solely set up product export and technology
advanced enterprises. Foreign invested enterprise complies
with the conditions above and has an operation term over 10
years will be exempted for real estate tax for a period of
10 years. Foreign invested enterprise other than the categories
above but has an operation term over 10 years will be exempted
for real estate tax for a period of 5 years. City maintenance
and construction tax and education
Add-in
fee
Foreigner invested
enterprises are free from the items now.
Custom
duty
Exemption will not
cover commodities listed in the promulgation Catalogue of
None-Duty- Free Imports for Foreign Investment Projects by
the state. Those not listed in the promulgation will enjoy
preferential policy for custom duty accordingly to respective
rules by the state
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