China, People's Republic of

Corporate - Taxes on corporate income

Last reviewed - 25 June 2021

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 5-year 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.
  • From 1 January 2019 to 31 December 2021, qualified small and thin-profit enterprises with an annual taxable income of 1 million yuan renminbi (CNY) or less are applicable to the effective CIT rate of 5%. Where their annual taxable income exceeds CNY 1 million but does not exceed CNY 3 million (inclusive), the CNY 1 million portion will be subject to an effective CIT rate of 5%, whereas the excess portion will be subject to the effective CIT rate of 10%. From 1 January 2021 to 31 December 2022, the portion of annual taxable income that does not exceeds CNY 1 million of a small and thin-profit enterprise will be subject to an effective CIT rate of 2.5%.
  • 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 2021.

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, enterprises established in the Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone are eligible for a reduced CIT rate of 15%, provided that the enterprise is engaged in projects that fall within the Catalogue for CIT Preferential Treatments of the zone.
  • From 1 January 2014, enterprises established in Zhuhai’s Hengqin New Area are eligible for a reduced CIT rate of 15%, provided that the enterprise is engaged in projects that fall within the Catalogue for CIT Preferential Treatments of the area.
  • From 1 January 2014, enterprises established in the Pingtan Comprehensive Experimental Zone are eligible for a reduced CIT rate of 15%, provided that the enterprise is engaged in projects that fall within the Catalogue for CIT Preferential Treatments of the zone.
  • From 1 January 2020 to 31 December 2024, enterprises registered in Hainan Free Trade Port with operational substance in the Hainan Free Trade Port engaged in the encouraged industries are entitled to a reduced CIT rate of 15%.
  • From 1 January 2020, qualified enterprises engaged in substantial production or R&D activities in key industries such as integrated circuits, artificial intelligence, biomedicine, civil aviation, etc., in Lingang New Area of Shanghai Pilot Free Trade Zone are eligible for a reduced CIT rate of 15% for 5 years commencing from the date of establishment. 

Local income taxes

There is no local or provincial income tax in China.