OVERVIEW OF CHINA'S CURRENT TAX SYSTEM
Enterprise Income Tax
(1) Taxpayers
The taxpayers of Enterprise Income Tax include any state-owned
enterprise, collective enterprise, private enterprise, joint
operation enterprise, joint equity enterprise, and other organizations.
(2) Tax base
The taxpayers' world-wide income from production and business
operations and from other sources shall be subject to Enterprise
Income Tax according to law. The Enterprise Income Tax is
computed on the basis of the taxable income which is equal
to the total income earned by the taxpayers in a tax year
less allowable deductions for the same tax year.
(3) Tax rates and computation of tax payable
Normally, the amount of Enterprise Income Tax payable is computed
on the basis of the taxable income and by applying the rate
of 33%. The formula for computing the tax payable is:
Income tax payable= Taxable income × 33%
Besides the statutory rate, two lower rates of 18% and 27%
are designed for some less profitable enterprises.
(4) Major tax exemptions and reductions
a. Enterprises operating in autonomous regions requesting
for preferential treatment and incentives may be, upon the
approval of the People's Government at provincial level, given
tax reductions or exemptions for a specified period;
b. Tax exemption or tax reduction may be granted to enterprises
or businesses that meet the relevant rules of the State, such
as high-technology enterprises and enterprises engaged in
tertiary industry set up in line with the relevant regulations
of the State, enterprises using wastes as their key raw materials,
newly-registered enterprises located in the revolutionary
base areas, minority nationality areas, remote areas and poor
areas approved by the State, enterprises-suffering from serious
natural disasters, newly-registered service enterprises providing
social employment opportunities, factories and farms run by
schools under the educational administration departments,
welfare production enterprises belonging to the civil administration
departments, township enterprises, State-owned agricultural
enterprises, etc..
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