Comparative Statement of Income Tax：
|
Taxable Item |
Foreign-Funded Enterprise Income Tax | Enterprise Income Tax |
|
Object of Taxation |
Tax shall be paid on income of a foreign-funded enterprise derived from production, business operations and other sources. | Tax shall be paid on income of an enterprise derived from production, business operations and other sources. |
| Tax Rate |
The income tax on enterprises with foreign investment shall be paid at the rate of 30%, and local income tax shall be computed at the rate of 3%, thus the total income tax shall be collected at the rate of 33%. Any foreign enterprise which has no establishment or place in China but derives profit, interest, rental, royalty and other income from sources in China, or though it has an establishment or a place in China, the said income is not effectively connected with such establishment or place, shall pay an income tax of 10% on such income. |
The income tax on enterprises shall be paid at the proportional rate of 33%. If the annual income tax payable by an enterprise is less than RMB 30,000 , the tax rate leviable on the enterprise shall be 18%; If the annual income tax payable by an enterprise is more than RMB 30,000 but less than RMB 100,000, the tax rate leivable on such enterprise shall be 27%. |
|
Calculation of Income Tax |
income tax payable=amount of income payable tax rate | income tax payable=amount of income payable tax rate |
|
Tax Preferential Treatment |
The income tax on foreign-funded enterprises which have establishments or places in special economic zones engaged in production or business operations, and on enterprises with foreign investment shall be levied at the reduced rate of fifteen percent. The income tax on enterprises with foreign investment of a production nature established in coastal economic open zones or in the old urban districts of cities where the Special Economic Zones or the economic and technological development zones are located shall be levied at the reduced rate of 24%. Any enterprise with foreign investment of a production nature scheduled to operate for a period of not less than ten years shall, from the year beginning to make profits, be exempted from income tax in the first and second years and allowed a fifty percent reduction in the third to fifth years. Technologically advanced enterprises and export-oriented enterprises, if meeting pertinent requirements upon the expiration of the preferential treatments that such enterprises are exempted from income tax in the first and second years and allowed a fifty percent reduction in the third to fifth years, shall pay their income tax at a reduced rate of 50%. |
The income tax on any high-tech enterprise as recognized by the State Council may be levied at the reduced rate of 15%. Newly-established enterprises that keep separate accounts may, from the day of starting their businesses, may enjoy a few of preferential treatments. Enterprises using domestic investments with an annual net income not exceeding RMB 300,000 from technological transfer and consultation, services and trainings related to this transfer shall be temporarily exempted from income tax for the above-mentioned amount; for the portion exceeding RMB 300,000 , enterprises which shall pay income tax according to law and need to use wastes as major raw materials, e.g. liquid waste, exhaust gas, waste residue and so on, shall enjoy tax deduction or exemption within 5 years. |
