China, People's Republic of
Corporate - Significant developmentsLast reviewed - 30 December 2022
China introduced several tax incentives in 2022 to boost regional economic development in the Guangdong-Macao Intensive Cooperation Zone in Hengqin (“Hengqin”) and Nansha district of Guangzhou (“Nansha”), including:
- Enterprises registered in Hengqin with operational substance in Hengqin are entitled to a reduced corporate income tax (CIT) rate of 15%, provided that enterprises are engaged in projects that fall within the Hengqin Catalogue for CIT Preferential Treatments.
- Enterprises registered in Hengqin engaged in tourism, modern service, and high-tech industries are exempted from CIT on the income generated by new overseas direct investment.
- Capital expenditures that meet certain requirements are eligible for deduction in one lump sum or accelerated depreciation or amortisation methods.
- For domestic or overseas high-end talents and talents in short supply working in Hengqin, their portion of individual income tax (IIT) that exceeds an effective tax rate of 15% is exempted.
- For Macao residents working in Hengqin, their portion of IIT exceeding the tax burden calculated under Macao’s individual tax regime is exempted.
- From 1 January 2022 to 31 December 2026, enterprises registered in the trial-run areas of Nansha (covering 23 square kilometers) with operational substance are entitled to a reduced CIT rate of 15%, provided that the enterprise is engaged in projects that fall within the Catalogue for CIT Preferential Treatments of Nansha.
- From 1 January 2022 to 31 December 2026, unutilized tax losses up to 8 years before a Nansha enterprise becomes an HNTE or technological SME may be carried forward to a maximum of 13 years, provided that the HNTE or technological SME is engaged in the high-tech key industries in the Catalogue for CIT Preferential Treatments of Nansha. This preferential treatment is applicable to the entire Nansha area covering 803 square kilometers.
- From 1 January 2022 to 31 December 2026, for Hong Kong residents working in Nansha, their portion of IIT which exceeds the Hong Kong tax burden shall be exempted; for Macao residents working in Nansha, their portion of IIT which exceeds the Macao tax burden shall be exempted.
The Stamp Duty Law of the People's Republic of China (the “SD Law") came into effect on 1 July 2022. As compared with the abolished provisional regulations on SD, the SD Law in general maintains the framework of the previous stamp tax system.