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Tax Concessions on China Company Income Tax

Updated:2020-4-16 12:57:09    Source:www.tannet-group.comViews:111

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A Foreign Investment Enterprise (FIE) is a PRC legal entity or unincorporated joint venture. An FIE may be an equity joint venture, a co-operative joint venture or a wholly foreign-owned enterprise (WFOE).Under the CIT(Company Income Tax) law, the standard tax rate is 25%.There are a number of tax concessions for FIEs provided for under the Company Income Tax Law and its Implementing Rules. Some of the more important of these are described as follows:

A lower CIT rate is available for the following industries:
1.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.


2.Key software production enterprises and integrated circuits (IC) design enterprises are eligible for a reduced CIT rate of 10% if they do not enjoy the CIT exemption treatment. An enterprise has to fulfil 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.


3.Qualified technology-advanced service 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 technology-advanced service enterprise.


4.Enterprises established in the Shenzhen 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 Catalogue for CIT Preferential Treatments of the zone.


5.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 Catalogue for CIT Preferential Treatments of the area.


6.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 Catalogue for CIT Preferential Treatments of the zone.


7.From 1 January 2019 to 31 December 2021, qualified small and thin-profit enterprises with an annual taxable income of 1 million yuan renminbi (CNY) or less are applicable to the effective CIT rate of 5%. Where their annual taxable income exceeds CNY 1 million but does not exceed CNY 3 million (inclusive), the CNY 1 million portion will be subject to an effective CIT rate of 5%, whereas the excess portion will be subject to the effective CIT rate of 10%.


8.From 1 January 2011 to 31 December 2020, encouraged enterprises in the Western Regions are eligible for a reduced preferential CIT rate of 15%.


9.Qualified third party enterprises engaged in pollution prevention and control are eligible for a reduced preferential CIT rate of 15% from 1 January 2019 to 31 December 2021.

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