• Why Set Up A China Business Company
2009 20% Corporate Income Tax For Factory/ Company
Company Type Requirements Unit RMB
Foreign-owned Co./
Joint-venture Co.		 1.Total Assets≦30,000,000
2.Employees≦100
3.Annual Tax Payable≦300,000
Business Co./
Bonded Trading Co.		 1.Total Assets≦10,000,000
2.Employees≦80
3.Annual Tax Payable≦300,000
※ Unsuitable for restricted/ prohibited categories
The new Corporate Income Tax Law introduced on Jan. 1, 2008 unified the tax to 25% regardless of domestic or Foreign enterprises, which establishes new tax system: 1. high-tech industry/ environment protection/ infrastructure/ agriculture/ Husbandry/ fishing/ foresting industries can enjoy low tax or exemption. 2. Foreign-owned companies established before March 16, 2007 have 5 years preferential transition period. 3. The tax rate of high-tech industry is 15%. 4. The preferential period of 12 provinces and 3 autonomous prefectures in western is valid until Dec.31st, 2010. 5. Withholding tax is adjusted from 0% to 10%. The new tax law will has profound influence on foreign owned enterprises. So all foreign-owned enterprises have to re-arrange their investment plan in order to improve the availability. For example, if OC locates in a tax-free jurisdiction signed DTT with China (like Seychelles), withholding tax can be lowered at 5%. Foreign company can transfer the investing item to western area according to its real situation of industry, where it can continue to enjoy 15% income tax rate.
  • 2009中國不同地別/不同業別/不同稅別
經濟區域類別 New Corporate Income Tax Old Corporate Income Tax
Rate Exemption Period Rate Exemption Period
State-level: special economic zones(5)/ Shanghai Pudong new area/ Tianjin Binghai new area/ bonded areas(13)/ new-and high-tech industrial zones(53)/ export processing zones(56)/ economic and technological development zones(54) 25% No 15%
 2-year free and
3-year half
14 coastal open cities: Dalian/ Qin Huangdao/ Tianjin/ Yantai/ Qingdao/ Lian Yungang/ Nantong/ Shanghai/ Ningbo/ Wenzhou/ Fuzhou/ Guangzhou/ Zhanjiang/ Beihai, and 49 province-level economic development zones. 25% No 24%
 2-year free and
3-year half
12provinces:Guangxi/ Chongqing/ Sichuan/ Yunnan/ Guizhou/ Xizang/ Shanxi/ Gansu/ Ningxia/ Qinghai/ Nei Menggu/ Xinjiang, and 3 minority group autonomous regions：Hunan Xiangxi/ Hubei Enshi/ Jijin Yanbian. 15%
 2-year free and
3-year half		 15% 2-year free and
3-year half
Other districts and interior citie 25% No 33% 2-year free and
3-year half

Income Tax on enterprises with foreign investment established before Dec. 31st, 2010 is 15%；Income tax on manufacturing enterprise with foreign investment operating above 10 years can continue to enjoy 2-year free and 3-year half.

Enterprises set up before March 16, 2007, if enjoying 15% tax rate, have 5 years transition periods (tax rate increases with 18%/ 20%/ 22%/ 24%/ 25% from 2008); if enjoying tax preferential treatment during the transitional period, the favorable is valid until the finish of period; if don’t enjoy favorable police because of benefits obtained, the preferential period is calculated from 2008; if there is cross among excessive preferential polices, new tax act and enforcement regulation, taxpayers can choose the best one.
  • 2009 Invested Industries Enjoyed Preferential Corporation Income Tax In China
Industry Invested Industries And Items Rate Exemption Period Notes
New- and
High-tech
Industries
 1.products (services) belong to the scope of new- and high-tec industries supported by State; 2.The proportion of R&D Costs to sales income coordinates with regulation; 3.the proportion of products (services) income to total income coordinates with regulation; 4.the proportion of engineers to employees coordinates with regulation. Inside Special
zone15%		 2-year free and
3-year half

Enterprises should own their core intellectual property, and follow relevant act and regulation
Outside Special
zone 15% 		No
Environment Protection 1. Environment protection/save electricity, water/sewage disposal/refuse treatment; 2.marsh gas utilization/save electricity and reduce emission technology transform/sea water desalinization 25% 3-year free and
3-year half
 the scope and condition should follow the relevant standard and police issued by State Department
Infrastructure The income of infrastructure items supported by State : Port/airport/railway/road/urban public transport/electricity power/water power 25% 3-year half and
3-year half
Except for the infrastructure used for contracted management/construction, or constructed and used by one.
Farming/Forestry/
Hunting/Fishing		 1. plant vegetable/corn/tuberous crop/oil producer/legumes/cotton/bast fibre plants/sugar/fruits/nuts 2.cultivate new type of crops; 3.plant traditional Chinese medicinal materials; 4.cultivate and plant forest; 5.feed cattle and poultry; 6.collect forest products; 7.irrigation/intinal processing of farm products/veterinary/promote agricultural technology/machinery operation and maintenance; 8.high sea fishing Exemption No Restriction and forbidden industries have not enjoy preferential corporate income tax
1.plant flowers/teas/spices or other plants; 2.seaculture/inland aquaculture 12.5% No

The new and high-tech enterprises established in special economic zones or Shanghai Pudong new area after Jan.1st, 2008, can enjoy 2-year free and 3-year half tax incentives from gaining the first income; income of branches set up outside the zones should be calculated respectively. It is not allowed to remit to parent company to pay tax.

The 2-year free and 3-year half and 3-year free and 3-year half here is different from the one we mentioned before. Foreign enterprises can enjoy 2 or 3-year free and 3-year half tax incentives (12.5% corporate income tax) from gaining the first income.