Taxation
Since the reform of tax system in 1994, 12 tax items have
been applied to foreigners and enterprise with foreign investment.
They are income tax for enterprises, value-added tax, excise,
business tax, urban house property tax, license tax for
usage of vehicles and ships, tariff, individual income tax,
land value-added tax, resources tax, stamp tax and slaughter
tax.
a. Income tax for enterprises
According to <The Code Of Income Tax For Foreign Enterprises
And Enterprises With Foreign Investment> and <The
Provisions Encouraging Foreign Investment By the State Council>,
foreign invested enterprises shoul$ pay for the income tax
at the rate of 24%.
Productive enterprises with foreign investment who have
an operation term of over 10 years, should enjoy an exemption
of income tax for the first two years of profit making and
an reduction of 50% for three more years.
b. Value-added tax
All enterprises and individuals engaged in selling commodities,
providing labor service for resembling and repairing and
those who are dealing with import business, should pay for
the value-added tax according to the law.
There are different tax rates for different industries.
(a) The tax rate should be 17% for taxpayers who are selling
or importing commodities, excluding those otherwise stated
in the following.
(b) For taxpayer who are selling or importing commodities
of the following, the tax rate should be 13%:
(1) Grain or vegetable cooking oil.
(2) Providing tap water, warm air, cool air, hot air, coal
gas, natural gas, marsh gas or coal products for civil usage.
(3) Drawing and picture, newspaper or magazine.
(4) Foodstuff, chemical fertilizer, pesticide, agricultural
machinery, or farming film.
(5) Other commodities stipulated by the State Council (including
metal or non-metal products and agricultural products).
(c) Unless otherwise stipulated by the State Council, the
tax rate is zero for taxpayers who are engaged in export
business.
(d) The tax rate will be 17% for taxpayers who are doing
in for labor service for resembling or repairing.
(e) Productive enterprises whose output value is lower than
one million RMB or wholesalers or retailers whose business
turnover is below 1.8 million RMB should be regarded as
small- scale taxpayers and enjoy a special tax rate of 6%.
c. Excise
People who are producing or consigning others to produce
or importing commodities such as cigarette, alcohol and
spirit, cosmetic, skin or hair makeup, costly jewelry, firecracker,
firework, petroleum, diesel oil, car tyre, motorcycle, car(including
limousine, cross-country car and mini-bus) or who are engaged
in retailing business of gold, silver and jewelry, should
pay the excise. Detail information please refer to <The
Temporary Provisions For The Excise Of People's Republic
Of China> and its <Detail Rules For Implementation>.
d. Business tax
(a) The rate of business tax is 3% for the industries of
transportation, architecture, telecommunication, culture
and sports.
(b) For service industries (including agency, hotel, food
and beverage, storage, lease, advertisement and other services),
transference of immaterial asset (including transference
of land usufruct, patent rights, trademark right, copyright
and commercial credit) and selling of real estate, tax rate
should be 5%.
(c) For industries of finance and insurance, it is 8%.
(d) For entertainment industries (including singing and
dancing halls, karaok, musical tea shops, billiard, golf,
bowling and other entertainment), the rate should be 5%
in rural areas and 10% in the other.
For detail information please refer to <The Temporary
Provisions For Value-added Tax of People's Republic of China>and
its <Detail Rules For Implementation>.
e. Urban house property tax
The house property tax is imposed upon the remanent value
of house properties and divided to terms of years. The
tax rate will be 1.2% when imposed upon the remanent value
and 12% when imposed upon the rent of the house property.
f. License tax for usage of vehicles and ships.
Foreign invested enterprises who are owning and using
vehicles, should pay for the license tax for usage of
vehicles and ships according to <The Temporary Provisions
For License Tax For Usage Of Vehicles And Ships>.
g. Tariff
The encouraged projects, part of the restricted projects
and the allowable projects with an export proportion of
100% listed in <The Guide Of Industries With Foreign
Investment> issued by State Planning Committee, State
Economic & Trade Committee and Ministry of Foreign
Trade and Economic Cooperation should enjoy an exemption
from tariff and the import value-added tax when they import
equipment for their own use, exclusive of those listed
in <List of Commodities Prohibited To Import By Foreign
Invested Enterprises>.
The raw materials, components or packing materials imported
by foreign invested enterprises for the production of
exported products should be exempted from tariff and the
import value-added tax.
For foreign invested enterprise, reasonable quantity of
activator, catalyzer or abradant imported for the production
of exported products should be exempted from tariff and
the import value-add tax.
h. Individual income tax
People who have residence in China or those who have lived
in China for over one year should pay income tax on the
income they earn either in China or in foreign countries.
People who have no residence in China and those who have
lived in China for less than one year should pay income
tax on the income they earn in China.
People who have no residence in China and those who have
continuously or accumulatively lived in China for less
than 90 days should be exempted for income tax on the
income which is not charged by any organizations in China.
i. Other kinds of taxes
such as land value-added tax, resources tax, stamp tax
and slaughter tax should be imposed according to relative
laws and provisions.
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Investment policies
