Foreign invested enterprises and foreign enterprises are liable to such kinds of taxes as corporate income tax, value added tax, consumption tax, business tax, vehicle and vessel license tax, Stamp tax, native farming and forestry produce tax, animal slaughter tax, city real estate tax and land value added tax in China. Customs duty is levied on imports and exports. Any individual working in the territory of China is liable to individual income tax. I
1. Corporate Income Tax I
Foreign invested enterprises (Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and solely foreign invested enterprises) and foreign enterprises which have their organizations established in the Chinese territory and are engaged in production and business are subject to corporate income tax at a rate of 30% and local income tax at a rate of 3%.
The manufacturing type foreign invested enterprises in Shanghai pay income tax at a reduced rate of 24%, and those in the economic and technological development zones of Shanghai and Pudong New Area pay income tax at a reduced rate of 15%. A 20% income tax shall be levied on the income derived from profits, interests, rentals, royalties and other sources in China by foreign enterprises which have no establishments in China . The above mentioned enterprises enjoy a reduced income tax rate of 10% in Shanghai (known internationally as withholding tax which is paid in advance by the
Disburser ). The enterprises which provide fund or equipment on favorable terms or which transfer advanced technologies can enjoy further preferential treatment in terms of income tax reduction or exemption upon approval of municipal government.
Income Tax Rate for Foreign Invested Enterprises in Shanghai
Tax |
Tax Rate |
| areas other than the debelopment zones |
Pudong New Area and development zones |
corporate Income Tax |
in a normal year |
manufacturing enterprise 24% |
manufacturing enterprise 15% |
| tax exemption and reduction period |
first and second years after making profit |
Imcome tax is exempted for enterprises with business periodof over 10 years |
| third,fourth ad fifth years after makig profit |
24%×0.5=12%
|
15%×0.5=7.5% |
| Extension of tax exemption and reduction period |
Technologicically advanced enterprises enjoy tax reduction by 50% for 3 more years |
Tax rate for technology intensive and knowledge intensive enterprises during their whole period of operations |
24%×0.5=12% |
10% |
tax reduction in a specific year |
When the export value of an enterprise reaches 70% or more of its total outpput in a certain year,the enterprise can enjoy 50% reduction of its tax in that said year |
24%×0.5=12% |
10% |
Lacal Income Tax |
in a normal year |
3% |
tax holidays |
first and second years after making profit |
tax exemption |
| tax exemption in a specific year |
export-oriented enterprise |
| when the export value of an enterprise reterpprise reaches 70% or more of its total output in a certain year,the tax can be exempted in that year |
when sending pros abroad |
free of tax |
Note: 1. The Corporate Income Tax rate of a non-manufacturing enterprise is 30%. The Local Income Tax rate of a non-manufacturing enterprise is 3%
2 For a foreign invested enterprise engaged In the building of municipal infrastructure with its business period of over 15 years, corporate income tax can be exempted for the first five years after making profits, and the corporate income tax can be reduced by 50% for the second five years
3. For a foreign invested enterprise carrying on building infrastructure in Pudong New Area, the corporate income tax rate is 15%. |
