The preferential tax policies for enterprises with foreign investment include the following main items: preferential enterprise income tax rate, enterprise income tax reduction or exemption and import tariff and value added tax (VAT) exemption of imported equipment. The Chinese government levies low tax on enterprises with foreign investment, and preferential tax policies are offered to the sectors and regions where investment is encouraged by the state.
Income Tax fee
The income tax on enterprises with foreign investment is levied at the rate of 33%. A 15 percent enterprise income tax rate shall apply to the foreign investment engaged in production and business operation or production nature that located in the state-level Economic and Technological Development Zones and New and High Technology Industry Development Zones .The income tax on production enterprises with foreign investment located in coastal economic open zones, special economic zones, or in the old urban district of cities where economic and technological development zones are located is levied at the rate of 24%.
Enterprise Income Tax Reduction or Exemption fee
Any foreign investment engaged in production or of a production nature intended to conduct business in China for at least 10 years shall, from its first profit making year, be exempt from income tax for the first two years and allowed a 50% reduction for the following three years. Any foreign investment engaged in advanced technology intended to conduct business in China for at least 10 years shall, from its first profit making year, be entitled to two-year's income tax exemption adjoining six-year's 50% reduction, with the reduced tax rate not less than 10%.
Import-stage Value-added Tax fee
Tax exemption for imported equipment: Equipment imported for foreign-invested or domestic-invested projects that are encouraged and supported by the state shall enjoy tariff and import-stage value-added tax exemption. Besides, the present average tariff rate is 12%.
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