China corporate income tax (CIT) are must be paid by all enterprises (except sole proprietorships and partnerships), including all organizations that generate income in China. The CIT Law categorizes enterprises into resident enterprises and non-resident enterprises, which are subject to different tax obligations. CIT payable is calculated using the formula: CIT payable = CIT taxable income x CIT rate – Tax exemptions or reductions based on tax incentives.
The enterprise income tax is a tax on the income of the production and operation of the domestic enterprises and operating units. The scope of the taxpayer is larger than the income tax of the company. The enterprise income tax payers are all domestic funded enterprises or other organizations in People's Republic of China which perform independent economic accounting.
Corporate Income Tax Rate
A 25 percent standard CIT rate is applied to resident enterprises and non-resident enterprises with income-generating establishments in China. A 10 percent withholding rate (temporarily reduced from 20 percent) is applied to China-sourced income not related to a non-resident enterprise’s establishments in China, or China income derived by non-resident enterprises without establishments in China. Small and low-profit enterprises are entitled to a reduced CIT rate of 20 percent, and if a taxpayer qualifies as a high-tech enterprise, a reduced CIT rate of 15 percent applies.
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What are the Taxpayers?
All the domestic enterprises or other organizations in People's Republic of China, which perform independent economic accounting, include the following 6 categories:
State owned enterprises, collective enterprises, private enterprises, joint ventures, joint-stock enterprises, and other organizations with income from production and operation and other income.
Enterprises refer to those registered in line with the state regulations. Other organizations with income from production and operation and other income are organizations such as institutions, social organizations with production and operation income, which are registered in accordance with the law and approved by the relevant state departments.
The independent economic accounting refers to have the ability to open bank account, establish the account book independently, prepare the financial accounting statement, and calculate the profit and loss separately.
The sole proprietorship enterprises and partnership enterprises do not use this law. These two types of enterprises only levy personal income tax.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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