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Last Updated 31/07/2024
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Ask a questionCompanies in China pay corporate income tax (CIT) on their income. Tax resident enterprises (TREs) pay CIT on their global income, while non-TREs pay CIT on their income from China only. The standard CIT rate is 25%.
However, some industries or sectors can benefit from lower CIT rates:
Additionally, some regions offer lower CIT rates for specific sectors:
Lastly, there is no local or provincial income tax in China.
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Each Tax Native has to accept a question from an Explorer before a conversation can begin. Once the Tax Native has accepted your question, a quote will be submitted for approval through the messaging portal.
Companies established in China are considered tax resident enterprises (TREs). Foreign companies with effective management in China are also considered TREs.
A permanent establishment (PE) refers to a place in China where a business conducts its operations, including:
VAT applies to the sales or importation of goods, provision of services, and sales of intangible and immovable properties. General VAT payers can credit input VAT against output VAT.
From April 1, 2019, the VAT rates for general VAT payers are:
Small-scale VAT payers have a 3% VAT rate, but due to COVID-19, it was reduced to 1% from March 1, 2020, to March 31, 2022, and VAT exemption applies from April 1, 2022, to December 31, 2022.
For taxpayers eligible for a zero rate, they may receive a credit or refund of the input VAT incurred.
VAT refund rates for exported services are the same as the applicable VAT rate, while refund rates for exported goods range from 0% to 13%. A formula determines the refund amount, and full refund of input VAT is not available for many exported goods.
Certain taxable activities, including specific types of sales of goods, services, and cross-border transactions, qualify for VAT exemption treatment. In these cases, the relevant input VAT incurred cannot be credited or refunded.
Taxable income is the money earned in a tax year after subtracting non-taxable income, tax-exempt income, various deductions, and any allowable losses from previous years. Businesses should use the accrual method of accounting.
Gross income includes money and non-monetary income from various sources such as sales, services, property transfers, dividends, interest, rent, royalties, and donations.
Non-taxable income refers to government funding, administration charges, government funds, and other income specified by the central government.
Inventory Valuation: Inventory must be valued according to costs, using methods like first in first out (FIFO), weighted average, or specific identification.
Inventory must be valued according to costs, using methods like first in first out (FIFO), weighted average, or specific identification.
Unrealized gains or losses due to changes in the fair value of financial assets, liabilities, and investment properties are not taxable/deductible for corporate income tax (CIT) purposes. They only become taxable/deductible when the asset/liability is sold or realized.
Capital gains are treated the same as ordinary income for tax-resident enterprises (TREs).
A TRE is exempt from CIT on dividends received from another TRE, except when the dividend is from publicly traded stocks held for less than 12 months. Non-TREs receiving dividends from China are subject to a 10% withholding tax (WHT), though some WHT deferrals may apply under specific conditions.
These incomes are treated as ordinary income.
Partnerships registered in China are not subject to CIT. The partnership’s income is taxable at the partners’ level.
Unrealized exchange gains (losses) from translating assets (liabilities) in foreign currency at year-end are generally taxable (deductible).
A TRE and its branches within and outside China are taxed on their worldwide income. There are no provisions in the CIT law to defer foreign income for tax purposes. A foreign tax credit is allowed for foreign income taxes paid on foreign-source income.
Certain enterprises in Hainan Free Trade Port and Hengqin are exempted from CIT on income generated by new overseas direct investments from 2020 to 2024.
Customs duties are fees charged on imported or exported goods based on customs regulations. Those responsible for paying customs duties include the receiver of imported goods, the sender of exported goods, and the owner of the items entering the country.
China’s import and export tariff system has been adjusted based on the World Customs Organisation’s revisions to the International Convention for Harmonized Commodity Description and Coding System.
Import duty can be charged in various ways, such as ad valorem (based on the value of the goods), specific, compound, or sliding terms. The dutiable value of the goods is used to calculate the amount of duty payable.
Import duties have different categories, including normal tariff rate, Most Favoured Nation (MFN) tariff rate, contractual tariff rate, preferential tariff rate, tariff-rate quota (TRQ) rate, and temporary tariff rate.
The country of origin of imported goods affects the application of other trade policies, such as TRQ, preferential tariffs, anti-dumping duty, and anti-subsidy duty.
Import and export goods can have reduced or exempted customs duties, import VAT, and consumption tax according to state regulations.
For goods entering and exiting customs special supervision zones, import duties, import VAT, and consumption tax are deferred, and they are exempted for exportation and paid for sales from the special supervision zones to domestic markets.
Various taxes are also levied in China, such as:
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TAX NATIVES: CURATOR — CuratorThe Curator is a fully-fledged member of the Tax Natives team. As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives. |
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TAX NATIVES: CREATOR — CreatorThe Creator is a fully-fledged member of the Tax Natives team. As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives. However, the Creator has additional responsibilities. They commit to their other Natives that they will produce at least one piece of quality content each quarter – whether an article, video or other valuable content. There are multiple Creator memberships available for each jurisdiction. Where a Curator fulfils their commitments then they receive a 100% discount against their monthly membership fee. |
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TAX NATIVES: ADVISOR — AdviserThe Adviser is a fully-fledged member of the Tax Natives team. As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives. The Adviser Native is a care-free soul and has made no other commitments to his fellow Tax Natives to generate content or curate a jurisdictional page. That's cool. However, the Adviser will be eligible to pay the full monthly membership fee. |
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| Initial admin fee | £250 Free | £250 Free | £250 Free |
| Minimum membership term | 12 months | 12 months | 12 months |
Article contentCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
No | YesCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
No |
| Managing and updating your jurisdiction page |
Yes |
No |
No |
NATIVE
TAX NATIVES: CURATOR —
The Curator is a fully-fledged member of the Tax Natives team. As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives.
However, the Curator has additional responsibilities. They are tasked with the responsibility of managing and updating one of the jurisdiction pages.
There is only one Curator membership available for each jurisdiction.
Where a Curator fulfils their commitments then they receive a 100% discount against their monthly membership fee.
| Initial admin fee | £250 Free |
| Minimum membership term | 12 months |
Article contentCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
No |
| Managing and updating your jurisdiction page | Yes |
TAX NATIVES: CREATOR —
The Creator is a fully-fledged member of the Tax Natives team. As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives.
However, the Creator has additional responsibilities. They commit to their other Natives that they will produce at least one piece of quality content each quarter – whether an article, video or other valuable content.
There are multiple Creator memberships available for each jurisdiction. Where a Curator fulfils their commitments then they receive a 100% discount against their monthly membership fee.
| Initial admin fee | £250 Free |
| Minimum membership term | 12 months |
Content creationCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
YesCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
| Managing and updating your jurisdiction page | No |
TAX NATIVES: ADVISOR —
The Adviser is a fully-fledged member of the Tax Natives team.
As such, they are capable of making introductions to other Tax Natives and are also able to take leads from their fellow Natives.
The Adviser Native is a care-free soul and has made no other commitments to his fellow Tax Natives to generate content or curate a jurisdictional page.
That's cool.
However, the Adviser will be eligible to pay the full monthly membership fee.
| Initial admin fee | £250 Free |
| Minimum membership term | 12 months |
Content creationCreator and Curators must create at least one piece of original, quality-approved content each quarter. |
No |
| Managing and updating your jurisdiction page | No |
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