Corporate Tax in China

The corporate tax applies both to Chinese and foreign companies that have operational units in China. The standard corporate income tax rate in China is 25% and the same applies to branches in China. In addition to this tax, Chinese companies are also required to pay other taxes. In some cases, special rates can apply for the corporate tax.

 

Our Chinese lawyers can give you detailed information about the Enterprise Income Tax Law that applies to companies and governs taxation in China.

 

 

The normal corporate tax in China is 25% and it applies to resident Chinese companies and those that produce income in China. Resident companies are taxed on their worldwide income, while non-resident companies are taxed only on their Chinese-source income. A company is considered a Chinese resident company if it is incorporated in China or if it has its main place of management located in this country. A foreign company in China is also subject to tax if it has an establishment in the country, such as a branch or if it derives income from this country.

 

Lower corporate tax rates apply to small businesses, companies with new technology-status and companies incorporated in certain regions in China where development is encouraged. These smaller rates are 20%, 15% or 10%, if certain requirements are met.

 

In general, the tax year is the same as the calendar year in China. Consolidated tax returns are usually not allowed in China and each company must file a separate return. Our Chinese attorneys can give you more details about the requirements for submitting the annual tax returns for companies. 

 

 

Apart from the corporate tax, China imposes other taxes and contributions for companies. Some of them are the following:

 

- the capital gains tax of 25%,

- withholding taxes on dividends, interest and royalties,

- social security contributions,

- the real estate tax,

- the deed tax,

- the land appreciation tax,

- the business tax,

- the consumption tax,

- the Value Added Tax.

 

In order to avoid double taxation for individuals and companies that are running businesses both in China and in another country, China has signed a large number of tax avoidance treaties. Our attorneys in China can give you a complete list of these treaties and tell you more about how they can influence your business.

 

For more information about taxation for companies and individuals in China, please contact our Chinese law firm.