Tax preference policies issued by the government
Enterprise income tax
1.The enterprise income tax rate shall be 25%. Where there is a loss in a taxable year of Enterprises, it may be brought forward to the succeeding years and made up by the income of succeeding years, but the limit of bringing forward may not exceed five years.
2.For the enterprise which conduct plantation of flowers, teas and other beverage crops and spice crops and sea farming and inland farming, halve the enterprise income tax.
3.For enterprise which conduct the following agricultural, forestry, animal husbandry and fishery it is exempted from income tax or decreased the income tax.
4.For the enterprises which undertake the projects stipulated in the “Public infrastructure projects income tax preferential catalogue", including the port and harbor, airport, railway, highway, city public transportation, electric power and water conservancy, and undertake the environmental and energy conservation projects, including public sewage treatment, public garbage disposal, methane comprehensive exploitation and desalination of sea water, from the year of the first operation income, it is exempted from the income tax from the first to the third years and the income tax from the fourth to the sixth years is halved.
5.For the income from qualified transfer of technology by enterprises, it is subject to exempted income tax for the 5 million Yuan and it is subject to collected by half for the portion exceeding 5 million Yuan.
6.Small-scale enterprises with minimal profits that conduct the unlimited or non prohibited industries and satisfy the following conditions are subject to the applicable enterprise income tax rate with a reduction of 20% .
7.High and new technology Enterprises that require key state support are subject to the applicable enterprise income tax rate with a reduction of 15%. Key software enterprises and integrated circuit enterprises in the national layout are subject to applicable enterprise income tax rate with a reduction of 10% if the tax exemption is not
8.Where non-resident enterprises that have not set up institutions or establishments in China, or where institutions or establishments are set up but there is no actual relationship with the income obtained by the institutions or establishments set up by such enterprises, they shall pay 10% enterprise income tax in relation to the income originating from China.
9.Research and development fees incurred by Enterprises in the development of new technology, new products and new skills and is not calculated in current profits and losses as the intangible assets, weighted deduction of 50% of the research and development fees may be computed in taxable income; if the intangible assets are
10.For venture investment enterprises that engage in equity investment in the unlisted middle and small high tech enterprises for more than 2 year, it may offset the taxable income at 70% of the investment amount in the 2nd year of share holding. If it is not sufficient to be offset, it may be offset in the following tax year.
11.The income obtained by Enterprises from the production of products in line with state industrial policies through comprehensive use of materials stipulated in the “Resources comprehensive use enterprise income tax preferential category” may be deducted from the taxable income by 90%.
12.The investment by Enterprises on procurement of special facilities for environmental protection, energy and water conservation and safe production which are listed in the “Environmental special facilities enterprise income tax preferential category”, “Water and energy conservation special facilities enterprise income tax preferential category” and “Safety production special facilities enterprise income tax preferential category” may be subject to an offset tax amount at 10% ratio. If it is not sufficient to be offset, it may be offset in the next 5 tax years.
13.Enterprises set up with approval prior to the promulgation of the “Law of the People’s Republic of China on Enterprise Income Tax” that enjoy low preferential tax rate in accordance with the tax laws and administrative regulations at the current period may, pursuant to the provisions of the State Council, gradually transit to the tax rate provide herein within five years after Jan. 1st2008. Where such enterprises enjoy regular tax exemption and reduction, the treatment continues to apply until expiry after the implementation of this Law. However, those that fail to be entitled to this treatment by reason of not making any profits, the preferential period shall be calculated from the year 2008.
Imports and exports tariff
1.For the export of the products manufactured by foreign investment enterprises, it is exempted from the tariff and value added tax and the export tax exemption, deduction and reimbursement policy is applicable.
2.For the raw material, auxiliaries, components and packing materials used for the production of the exported products of the foreign investment enterprises, it is exempted from the tariff and value added tax. If import license is applicable, it only requires customs supervision and import license is not required.
3.For encouraged items in the “Foreign investment industries guidance category”, the foreign investment that meets the requirement of “Foreign investment competitive industries category of the middle west ” and the domestic funded projects supported by county, the self used imported equipment within the total investment is exempted from tariff and import linkage tax, except for the commodities listed in the “Category of non tax exemption imported items of the foreign investment projects” and “Category of non tax exemption imported items of the domestic funded projects”.
4. For the home equipments purchased by the foreign investment enterprises within the total investment, if such equipments are listed in the national tax free category, reimburse the value added tax of the of the home equipments with full amount. For the imported technical products of the foreign investment enterprises which meet the national industrial polices, deduct or exempt the enterprise income tax of the purchased home equipment according to the regulation.
5.For the already set encouraged type (including the types that meet the requirement of “Foreign investment competitive industries category of the middle west”) of foreign investment enterprises, foreign invested research center, advanced technical and product exported type of foreign investment enterprises, the import of the self used equipments and the supported technology, components and spare parts is subject to exempted tariff and import linkage tax, with the precondition that such import is within the originally approved business scope and the purchase is self funded or the equipments and the supported technology, components and spare parts cannot be manufactured in China.
6.For the foreign investment enterprises, if it is required to import the self used equipments for the production of the items listed in the “National high tech products category”, along with the imported technology and supporting components and spare parts, it is exempted from import tariff and import linkage value added tax.
7. For the advanced technology listed in the “National high tech products category” imported by foreign investment enterprises, the software fees paid to the overseas is exempted from imported tariff and import linkage tax.
Several polices on software and integrated circuit
1. For the certified domestic new software enterprise and integrated circuit enterprise, from the profit earning year, it is exempted from enterprise income tax in the first and second year and it is collected by 50% from the third to the fifth year.
2. For the integrated circuit enterprise with the investment of more than 8 billion Yuan or the band width of the integrated circuit less than 0.25um, if the business period exceeds 15 years, from the profit earning year, it is exempted from enterprise income tax from the first to the fifth year and it is collected by 50% from the sixth to the tenth year.
3. For the integrated circuit enterprise with band width of the integrated circuit equal to and less than 0.8um, after certification, from the profit earning year, it is exempted from enterprise income tax in the first and the second year and it is collected by 50% from the third to the fifth year.
4. For the software purchased by the enterprises and public institutions, if it meets the requirement of the fixed assets or intangible assets, it is possible to account as fixed assets or intangible assets. With the approval of the tax authorities, its depreciation or amortization years may be shortened appropriately and the minimum is 2 years.
5. For the production equipments of the integrated circuit enterprises, with the approval of the tax authorities, its depreciation years may be shortened appropriately and the minimum is 3 years.
6. For the software developed and produced independently by the general taxpayer, collect the value added tax at the rate of 17% before 2010. If the real tax exceeds 3%. collect the tax and then reimburse it immediately. The reimbursed tax amount should be used for the research and production expansion of the enterprise, but it is not deemed as the taxable income, so it is exempted from enterprise income tax.
7. If the general taxpayer of value added tax sells its self manufactured integrated circuit and products (including the monocrystal e silicon piece), collect the value added tax by 17%. If the real tax exceeds 6%, collect the tax and then reimburse it immediately. The reimbursed tax amount should be used for the research and production expansion of the enterprise, but it is not deemed as the taxable income.
8. For the employment training fees of the software and integrated circuit manufacturing enterprises, the real amount is to be deducted from the taxable income. (Basis of above polices: "Polices of the state council on the encouragement of the software and integrated circuit industry development" (No 18) issued in June 24th, 2000; "Tax policies of the Ministry of Finance, SAT and Maritime Customs Administration on the encouragement of the software and integrated circuit industry development” (No. 25) issued in Sep. 22th, 2000).