| Investment Environment Report |
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| Promotion & Preferential Policies |
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Tax Preferential Policy
- Preferential policy for income tax reduction and exemption of Enterprise with Foreign Investment
- Preferential Policy for exempting from local income tax, urban real estate tax and vehicle and vessel license tax of Enterprise with Foreign Investment
- Preferential policy for procurement at home of Enterprise with Foreign Investment
- Exemption & deduction policies for import and export customs duty
- Preferential policy for income tax reduction and exemption of Domestic-funded Enterprise
- Policy for encouraging the creativity of researching and developing
- Exemption & deduction policies for technical service income
- Exemption & deduction policies for innovation service industry and intermediary service industr
1. Preferential policy for income tax reduction and exemption of Enterprise with Foreign Investment
- In case productive enterprises with foreign investment have an operating period of more than 10 years, pay income tax with 15 % reduction. In case productive e
 nterprises with foreign investment will have an operating period of more than 10 years, its enterprise income tax is,
commencing from the year in which it starts to profit, exempted from in the first and second year, and reduced with 7.5 % reduction from the third to the fifth year. After the completion of the above-mentioned years of tax exemption and reduction, enterprises with foreign investment that still are advanced technology business enterprise, shall be reported to the relevant department for approval to enjoy reduction with 10 % for another three years.
- Foreign-funded export enterprises may enjoy a reduced income tax rate of 10% after the completion of the above-mentioned years of tax exemption and reduction if their export value exceeds 70% of their total output value of the year.
- Where an enterprise with foreign investment sustains losses in a tax year, it may make up such losses by using the income of the following year. If the income of the following tax year is not sufficient to make up for the losses, the losses may be made up in the continuing and consecutive tax years. However, the maximum period may not exceed five year.
- The industries of enterprises with foreign investment, which are supported by the inner capital in mid-west China during the period of 2001 to 2010, pay income tax with 15% reduction.
- If the foreign-funded enterprises reinvest in the projects in mid-west China, and the foreign investment exceeds 25% of the enterprise total investment, they may enjoy the preferential policies for foreign-funded enterprises.
- Where a foreign investor of an enterprise with foreign investment uses its profits earned from the enterprise to reinvest directly into the enterprise for increasing its registered capital, or use its profit as a capital to invest and establish other enterprises with foreign investment with the operating period not less five year, 40% of the income tax amount already charged on the reinvested portion shall, upon the application of the investor and approved by the tax authority, be funded therefore. If theses investors reinvested their profits into exported-oriented or advanced technology enterprises, may have a return of all their paid corporate income tax on the reinvestment amount.
2. Preferential Policy for exempting from local income tax, urban real estate tax and vehicle and vessel license tax of Enterprise with Foreign Investment
- Enterprise with foreign investment, excluding the entertainment industry, service industry and urban real estate development, exempt from local income tax, urban real estate tax and vehicle and vessel license tax.
3. Preferential policy for procurement at home of Enterprise with Foreign Investment
- When the foreign-funded enterprise procures domestically manufactured equipment in the range of total investment, which belongs to the duty-free catalogue, the full amount of value-added tax on such domestic equipment will be refunded and regarded as a creditable amount in business income tax.
4. Exemption & deduction policies for import and export customs duty
- Imported equipment for their own use and suitable quantity of complete parts and spare parts, which are required in the project of foreign-funded, government loan, international financial organization loan and investment at home, allow exempting from customs and customs duties value-added tax.
- The foreign-funded enterprise, Research and development center with foreign investment, technological updating for advanced technology enterprises and export-oriented enterprises have been already set, whose project belongs to the encouraged kinds and limited kinds B can import the equipment for their own use and complete technology, accessories and spare parts without paying customs and customs duties value-added tax.
- For the product listed in the Science and Technology Department, Outside Economic Trade Department “Export Catalogue on Chinese High-technology Goods”, if the refunding tax rate doesn’t reach the taxation rate after exporting the product, refunding tax may be conducted based on the taxation rate and current export refunding tax with the approval of the State Administration of Taxation.
5. Preferential policy for income tax reduction and exemption of Domestic-funded Enterprise
- Domestic-funded High-Tech Enterprise approved by the High-Tech Zone pay income tax with 15 % reduction. Income tax of High-Tech Enterprise newly built up, commencing from the year in which it starts to achieve profit, is exempted to pay income tax for two years.
- The industries of enterprises with domestic-funded, which is supported by the inner capital in mid-west China during the period of 2001 to 2010, pay income tax with 15 % reduction.
6. Policy for encouraging the creativity of researching and developing
- The Research and Development Center of independent accounting inside the aviation base may enjoy the preferential policy for tax of Hi-Tech Enterprise. To Research and Development Center established by foreign-funded, its income tax is, commencing from the year in which it starts to achieve profit, is exempted to pay income tax for two years, and reduced with 7.5 % reduction from the third to the fifth year, and reduced with 15 % reduction later. To the Research and Development Center established newly by inner capital, its income tax is, commencing from the year in which it starts to achieve profit, is exempted to pay from the first and second year, and reduced with 15 % reduction later.
- Technology Development Authority of enterprise import the Science and Research equipment required and technology and complete parts and accessories with equipment according to contract without paying customs and customs duties value-added tax, excluding that all products listed in the “Imported Product Catalogue on Not Allowing Exempting from Tax for Project of Domestic-funded ”specified according to No.[97]37 Guofa document.
- Encourage to enforce enterprise investment. All the expense for researching and developing the new product, new technology and new process, including expense for designing new product, expense for constituting the process rules, expense for adjusting equipment and experimenting on the raw material and half-finished product, data expense of technical books, mid-experimental expense not included in the state plan, worker’s salary in research authority, depreciation expense of research equipment, other expense related to the trial-production of new product and technology research, and entrusting other unit to performing the trial-production of science and research, is not restrained from the proportion and calculated in the management expense.
- 7. Exemption & deduction policies for technical service income
- Technical service income obtained by transferring of technology achievement, technical training, technology consulting, technical service and technology contract of different industries that is served by the Science research Unit and academy is exempt from the income tax.
- Income tax occurred during the course of technology transferring, and technology consulting, technical service; technical training related to the technology transferring and annual net income of Enterprise and business unit less than 300,000 yuan can be exempted from, if the item exceed 300,000, shall pay the income tax in accordance with the law.
- 8. Exemption & deduction policies for innovation service industry and intermediary service industry tax.
- It is encouraged that social force hold the various enterprise incubators by different pattern, for the comprehensive enterprise incubator like innovation service center can enjoy the preferential policy for tax of Hi-Tech Enterprise after obtaining the approval from provincial and municipal Science and Technology Department
Intermediary service authority such as: independent accounting, auditing, valuation, training, management, insulating, talent center built up newly , from the day of opening, is exempted from income tax within two years, and enjoy preferential policy of 15% reduction later according to the relevant policy f or western development | |
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