In China, corporate tax is a tax collected from companies. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year. Revenues from the corporate tax rate are an important source of income for the government of China.
Under the corporate income tax law, the standard tax rate is 25%. A lower corporate tax rate is available for the following sectors/industries:
Qualified new/high tech enterprises are eligible for a reduced CIT rate of 15%. An enterprise has to fulfil a set of prescribed criteria and be subject to an assessment in order to qualify as a new/high tech enterprise.
Integrated circuit (IC) production enterprises with a total investment exceeding 8 billion renminbi (CNY), or that produce integrated circuits with a line-width of less than 0.25 micrometer, are eligible for a reduced CIT rate of 15%.
Key software production enterprises and IC design enterprises are eligible for a reduced CIT rate of 10%. An enterprise has to fulfill a set of prescribed criteria and be subject to an assessment in order to qualify as a key software production enterprise or key IC design enterprise.
From 1 January 2009 to 31 December 2018, qualified technology-advanced service enterprises in 31 pilot cities engaging in outsourcing services (e.g. Beijing, Shanghai, Tianjin, Guangzhou, Shenzhen) are eligible for a reduced CIT rate of 15%. This incentive is only available to enterprises that are mainly engaged in the prescribed outsourcing services, and an enterprise has to fulfill a set of prescribed criteria and be subject to an assessment in order to qualify as a technology-advanced service enterprise.
From 1 January 2016 to 31 December 2017, qualified technology-advanced service enterprises in the 15 innovative service development pilot areas (e.g. Shanghai, Tianjin, Guangzhou, Shenzhen) are eligible for a reduced CIT rate of 15%. This incentive is only available to enterprises that are mainly engaging in the prescribed technical services, and an enterprise has to fulfill a set of prescribed criteria and be subject to an assessment in order to qualify as a technology-advanced service enterprise.
Enterprises established in the Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone are eligible for a reduced CIT rate of 15%, provided that the enterprise is engaged in projects that fall within the Catalog for CIT Preferential Treatments of the zone.
Enterprises established in Zhuhai’s Hengqin New Area are eligible for a reduced CIT rate of 15%, provided that the enterprise is engaged in projects that fall within the Catalog for CIT Preferential Treatments of the area.
Enterprises established in the Pingtan Comprehensive Experimental Zone are eligible for a reduced CIT rate of 15%, provided that the enterprise is engaged in projects that fall within the Catalog for CIT Preferential Treatments of the zone.
For qualified small and thin-profit enterprises with annual taxable income of less than CNY 500,000, the CIT rate is reduced to 10% from 1 January 2017 to 31 December 2019.
From 1 January 2011 to 31 December 2020, encouraged enterprises in the Western Regions are eligible for a reduced preferential CIT rate of 15%.
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