Policy items

General regulations (except national development zone)

National development zone

Economic and technological development zone

Hi-tech industrial development zone

Enterprise Income Tax Rate

1. Productive enterprises

30%

15%

/

2. High tech enterprises

30%

/

15%

Production Type Enterprises belonging to the projects of intelligence/technology intensive type, research center with long term of fund returning

30%

15%

4. Product Export Enterprises with export value over 70% of the total production value after the expiry of tax deduction and exemption

15%

10%

5. Financial Organizations with the foreign invested operation fund over USD10,million and operation period over 10 years

30%

15%, with special approval by the State Council

6. Energy, transportation, ports, docks, and other projects encouraged by the State

15%

Income tax withholding rate

1 Foreign investors have no agencies established in China , but with incomes derived from the interests, dividends, rents, licensing charges or other incomes from China ..

10% from January of 2001

For investors with advanced technology and favorable conditions

Income tax withholding exempted with approval by department concerned under the state council

Profit derived from foreign-funded enterprise by foreign investor

Tax Free

Income tax Deduction And Exemption

Productive enterprise and Hi-tech enterprise and research center authorized

Commencing from the 1st profit-making year, business income tax exemption is applicable for the 1st and 2nd years, and 50% reduction in business income tax applicable for the 3rd year through the 5th year.

2. Newly established transport, electric power, water, conservancy, postal service, broadcast and TV projects in the Western China

Commencing from the 1st profit-making year, business income tax exemption is applicable for the 1st and 2nd years, and 50% reduction in business income tax applicable for the 3rd year through the 5th year.

3. Non-productive enterprises

Any foreign financial institution in the State Council-approved zones, which has an investment above US$ 10 million and an operating period above 10 years, commencing from the 1st profit-making year, is entitled to business income tax exemption for the 1st year, and is entitled to a 50% reduction is business income tax for the 2nd and 3rd years

4. Advanced technology enterprises

When its exemption period expires according to relative regulations, the enterprises which still retain the title of “Advanced technology Enterprise ” shall be entitled to a 50% reduction in business income tax for additional 3 years

5. Enterprises engaged in port or dock construction with the operating period above 15 years

Commencing from the 1st profit-making year, business income tax exemption is applicable for the first 5 years, and 50% reduction in business income tax applicable for the 6th year through the 10th year

6. Projects that have claimed additional investment

Any foreign enterprise or individual having invested in the encouraged projects specified in the Catalog for the Guidance of Foreign Investment Industries adds their investments up to the specified amount, the income from the added investment may be accounted independently and entitled to business income tax exemption for the 1st and 2nd years and 50% reduction in business income tax from the 3rd year through the 5th year

7. Enterprises engaged in agriculture, forestry, animal husbandry and the enterprise in underdeveloped border areas.

After the tax exemption period expires according to relative regulations 15-30% reduction of the business income tax will be applicable for additional 10 years, subject to the competent taxation authorities

Sales tax

Sales tax may be exempted for the income of foreign-invested enterprises or individual engaging technology transfer, technology development or related consultation, service.

Tax exemption for reinvestment

1. For foreign investor reinvesting in the enterprise or setting up other foreign funded enterprise with the assets or profit obtained, with foreign investment over 25% of total registered capital and business period no less than 5years, 40% of income tax paid for reinvestment may be refunded, with approval of taxation administration.

2. For reinvestment in enterprise entitled of “export oriented enterprise” or “Technology –advanced enterprise”, refund for 100% tax paid may be applied.

Customs duties

1. Equipment import

1. According to the regulations on the “all-for-export” projects specified in the Catalog for the Guidance of Foreign Investment Industries, import duties and import value-added taxed shall be levied on the imported equipment first. When the “all-for-export” is verified to be true since the date of production, the tax paid will be refunded within 5 years

2. The customs duties and import value-added taxed shall be exempted for the imported equipment, which is a part of the total investment in the foreign-funded projects that transfer its technologies and is encouraged in the Catalog for the Guidance of Foreign Investment Industries. The items listed in the Catalogue of Non-Tax-Free Imported Commodities of Foreign-Funded Projects are excluded

2. Product export

Export tariffs shall be exempted, excluding those products limited by state for export. Export tariff may not be levied on products, which are processed in Eco-tch Development Zone with over 20% of added value, by customs with relevant certificate. For equipment, raw materials, parts, construction materials and office articles purchased in China by enterprises or administration departments in Export Processing Zone, refund may be applied in accordance with regulations.