(Source: https://pltfrm.com.cn)
As of my last update in April 2023, the corporate income tax rate in China is generally 25% for both foreign and domestic companies. However, there are several special circumstances and incentives that can affect this rate for foreign companies operating in China:
- Standard Rate: The standard corporate income tax (CIT) rate is 25%. This applies to most companies, including foreign enterprises, unless specific exceptions or incentives apply.
- Reduced Rate for High and New Technology Enterprises (HNTEs): Qualified high-tech enterprises may be eligible for a reduced tax rate of 15%. This incentive is designed to encourage technological innovation and development. Companies must meet certain criteria related to their field of technology and R&D expenditures to qualify.
- Reduced Rate for Small Low-Profit Enterprises: Smaller enterprises with low profitability may qualify for a reduced tax rate. The criteria for qualification typically include limits on taxable income, number of employees, and total assets. For eligible companies, the tax rate is 20%.
- Special Economic Zones: In certain designated areas, such as Special Economic Zones (SEZs), High-Tech Industrial Development Zones, and Free Trade Zones, foreign companies might be eligible for preferential tax treatment. This can include reduced tax rates, tax holidays, or other incentives.
- Tax Holidays and Reductions for Specific Industries: Certain industries or projects, such as environmental protection, energy and water conservation, or specific types of infrastructure projects, may qualify for tax holidays or reductions. These incentives typically provide a period of exemption followed by a period of reduced taxation.
- Encouragement of Reinvestment: Foreign companies that reinvest their profits in China, particularly in specific encouraged sectors or in equity investments, may be eligible for tax rebates or exemptions. The details and qualifications for these incentives can be complex.
- Double Taxation Relief: To prevent double taxation of income earned in China, foreign companies can benefit from China’s Double Taxation Avoidance Agreements (DTAs) with numerous countries. These agreements provide mechanisms for tax credits or exemptions in cases where income is taxed in both China and the company’s home country.
- Withholding Tax on Dividends: Income repatriated from a Chinese subsidiary to a foreign parent company in the form of dividends is subject to a withholding tax, typically at a rate of 10%. This rate can vary depending on DTAs between China and the parent company’s home country.
It’s important for foreign companies to consult with tax professionals for up-to-date and detailed advice, as tax laws can be complex and subject to change. Additionally, eligibility for tax incentives often requires meeting specific criteria and may involve detailed application processes.
PLTFRM is an international brand consulting agency that works with companies such as Red, Tiktok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries exports in China account for 97% of the total exports in Asia. Contact us and we will help you find the best China e-commerce platform for you. Search pltfrm for a free consultation!
