Corporate Income Tax

Item

Preferential Treatment

Applicable to

Corporate income tax rate

15%

·Foreign-funded productive enterprises with an operation period of 10 years and above
·Foreign-funded hi-tech enterprises in Xiamen
·Joint ventures (investing in the construction of ports and docks with an operation period exceeding 15 years) enjoy a tax holiday within the first 5 years starting from the profit-making year and liable to a 50% cut for the next 5 years.
· Service enterprises with a foreign investment over USD 5 million (and an operation period exceeding 10 years) can be exempted from the income tax for the 1st profit-making year and liable to a 50% cut for the next 2 years.

1st and 2nd profit- making years

Tax break

3rd ~5th profit- making years

50% cut

After the expiration of the stipulated corporate income tax exemption and reduction period

Enjoy a preferential tax rate of 10%

· Enterprises of advanced technology type (10% within the 6th-8th years after tax holiday for the first 2 years and 50% cut for the following 3 year)
· Export-oriented enterprises (on condition that its export value taking up more than 70% of the total output value of the year)

Tax refund for reinvestment

The income tax levied on the reinvested profit shall be refunded at full amount

The foreign investor of a foreign-funded enterprise reinvests the after-tax profits of the enterprise to set up or expand an export-oriented enterprise or a hi-tech enterprise (with an operation period of no less than 5 years), or to increase the registered capital of the enterprise.

40% of the income tax levied on the reinvested profit shall be refunded

The foreign investor of a foreign-funded enterprise reinvests the profits on the same enterprise or to establish another foreign-funded enterprise (with an operation period no less than 5 years), or to increase the registered capital of the enterprise.

Income tax rebate

40% of the domestic equipment investment can be deducted from the increased amount of income tax levied during the year of equipment   procurement than that of the previous year

Foreign-invested enterprises purchasing the domestic equipment within the total investment amount in accordance with relevant conditions stipulated by the State.

Taxable income rebate

50% of the actual R&D fee can be deducted from the taxable income in that year

Foreign-invested enterprises engaged in R&D and their R&D fee of that year in China increasing by over 10% (including 10%) over the previous year.

Remarks: The corporate income tax is calculated per year and prepaid at a quarterly basis. The settlements will be completed within 5 months after the end of the year. Overpayment will be refunded while deficiency shall be supplemented.

From:http://www.xipa.com.cn/en/incxm2_more.php?id=247

Customs Duty Exemptions and Reductions

Except for the goods listed in "Imported Goods without Duty Exemptions for Foreign Investments", the self-use equipments within the total investment amount imported for foreign-invested projects which involves transfer of technology and falls into the category of encouraged items in "Guideline for Foreign Invested Industries within the total investment" are exempted from customs tariff and import VAT.
The imported goods without duty exemptions include: televisions, video cameras, video-players, hi-fis, air-conditioners (central air-conditioners excluded), refrigerators, ice-boxes, washing machines, cameras, copy machines, SPC telephone exchange, micro computers and peripheral equipment, telephones, wireless beepers, faxing machines, electronic calculators, typewriters, word processors, cars, motorbikes and other dutiable items listed in Chapter 1 to Chapter 83 and those in Chapter 91 to Chapter 97 of "Duties on Imported Goods of the Customs of P.R.C." (Technology, accessories and spare parts imported with the project equipment excluded).

From:http://www.xipa.com.cn/en/incxm2_more.php?id=248

Export Tax Refund

Goods exported by foreign-funded enterprise are covered by the scheme of tax exemption, tax offset and tax rebate.

  • The value added in the current process (or the last process) of goods exported by the productive enterprise is tax exempted.
  • The tax is calculated at FOB price and the difference between tax rate and tax rebate rate shall be deducted from all the paid tax of the enterprise on purchase. The rest of the paid tax on purchase can be offset by the tax on domestic sales.
  • Should the sales tax be insufficient for the offset, the balance can then be reclaimed from the relevant authorities for tax rebate.

From:http://www.xipa.com.cn/en/incxm2_more.php?id=249