China, People's Republic of

Tax resident enterprises (TREs) are subject to corporate income tax (CIT) on their worldwide income. A non-TRE that has no establishment or place in China is taxed only on its China-source income. A non-TRE with an establishment or place in China shall pay CIT on income derived by such establishment or place from sources in China as well as income derived from outside China that effectively is connected with such establishment or place.

Under the CIT law, the standard tax rate is 25%.

A lower CIT rate is available for the following sectors/industries on a national basis:

• Qualified new/high tech enterprises are eligible for a reduced CIT rate of 15%. An enterprise has to fulfil a set of prescribed criteria and be subject to an assessment in order to qualify as a new/high tech enterprise.
• Encouraged designated key software enterprises and encouraged designated integrated circuits (IC) design enterprises are eligible for a reduced CIT rate of 10% after the first five years of CIT exemption.
• Qualified technology-advanced service enterprises are eligible for a reduced CIT rate of 15%. An enterprise has to fulfil a set of prescribed criteria and be subject to an assessment in order to qualify as a technology-advanced service enterprise.
• For qualified small and thin-profit enterprises, the annual taxable income up to 3 million yuan renminbi (CNY) (inclusive) is subject to an effective CIT rate of 5% from 1 January 2023 to 31 December 2027.
• Qualified enterprises engaged in pollution prevention and control are eligible for a reduced preferential CIT rate of 15% from 1 January 2019 to 31 December 2027.

A lower CIT rate is available in specific regions for specific sectors/industries as follows:

• From 1 January 2011 to 31 December 2030, encouraged enterprises in the Western Regions are eligible for a reduced preferential CIT rate of 15%.
• From 1 January 2014 to 31 December 2025, encouraged enterprises established in the Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone with operational substance are eligible for a reduced CIT rate of 15%.
• Encouraged enterprises established in the Guangdong-Macao Intensive Cooperation Zone in Hengqin with operational substance are eligible for a reduced CIT rate of 15%.
• From 1 January 2014 to 31 December 2025, encouraged enterprises established in the Pingtan Comprehensive Experimental Zone with operational substance are eligible for a reduced CIT rate of 15%.
• From 1 January 2020 to 31 December 2024, encouraged enterprises registered in the Hainan Free Trade Port with operational substance in the Hainan Free Trade Port are eligible for a reduced CIT rate of 15%.
• From 1 January 2022 to 31 December 2026, encouraged enterprises registered in the trial-run areas of Nansha (covering 23 square kilometres) with operational substance are eligible for a reduced CIT rate of 15%.
• From 1 January 2023 to 31 December 2027, encouraged enterprises registered in the specific closed area of Shenzhen park of Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone with operational substance are eligible for a reduced CIT rate of 15%.
• From 1 January 2020, qualified enterprises engaged in substantial production or research and development (R&D) activities in key industries, such as integrated circuits, artificial intelligence, biomedicine, civil aviation, etc., in the Lingang New Area of the Shanghai Pilot Free Trade Zone are eligible for a reduced CIT rate of 15% for five years commencing from the date of establishment.

Local income taxes

There is no local or provincial income tax in China.