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What are China’s major taxes?


What are China’s major taxes?

Posted by Melenco Team in Business Development 14 Aug 2013

Tax planning may be quite complicated as China´s applies different taxes at different tax rates depending on your location and your scope of business.

We will discuss the major taxes on companies:

  1. Corporate income tax– is the new corporate income tax law (which took effect in 2008), unified the tax rates for foreign and domestic enterprises. The income tax rate for all companies in China today, both foreign and domestic, is 25 percent. Corporate income tax (CIT) is calculated against the net income in a financial year after deducting reasonable business costs and losses – in other words it is effectively a tax on profits. The CIT is generally paid annually but may also be paid quarterly.
  2. Business tax- Business tax (BT) is a tax payable against turnover by all enterprises and individuals undertaking the following businesses: Providing taxable services, including communications, transport, construction, finance and insurance, telecommunications, culture, entertainment and service industries; transferring intangible assets; and selling real estate. Rates of BT vary from 3-20 percent, depending on the industry.
  3. Value-added tax- aims to resolve the issue of duplicate taxation on goods and services and support the development of the modern service industry, a pilot project has been launched to replace business tax (BT) with VAT in the transport and certain modern service sectors. Enterprises and individuals engaged in the following are required to pay VAT: sale of goods, provision of processing, repairs and replacement services, and import of goods in China
  4. Withholding tax– Withholding tax is a PRC tax levied on passive income (i.e., dividends, bonuses, other equity investment gains, interests, rentals, royalties, transfer of property) received by non-resident enterprises from China. The withholding income tax rate is currently 10 percent.

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