Detailed, easy-to-understand tax guide for foreign investors in China. Learn about the latest tax rates and policies for major taxes like Corporate Income Tax, VAT, Individual Income Tax, and more.
View Tax Rates Get Tax ConsultationUnderstand the major taxes and their rates for doing business in China
Corporate Income Tax is levied on the production, operation and other income of enterprises within China. The standard rate is 25%, but there are corresponding preferential tax policies for enterprises in different industries and of different types.
| Taxpayer Type | Tax Rate | Applicable Scope | Remarks |
|---|---|---|---|
| General Enterprises | 25% | Enterprises established in China | Standard rate |
| High-Tech Enterprises | 15% | Certified high-tech enterprises | Must meet specific conditions |
| Small Low-Profit Enterprises |
5% (Annual taxable income ≤ ¥1 million)
10% (¥1 million < Annual taxable income ≤ ¥3 million)
|
Qualified small low-profit enterprises | Jan 1, 2023 to Dec 31, 2024 |
| Western Development Enterprises | 15% | Encouraged industries in western regions | Valid until Dec 31, 2030 |
| Technologically Advanced Service Enterprises | 15% | Certified technologically advanced service enterprises | Specific service fields |
CIT is calculated on an annual basis, prepaid monthly or quarterly, with annual reconciliation. The tax year runs from January 1 to December 31 of the Gregorian calendar.
Reasonable expenditures actually incurred by enterprises that are related to obtaining income, including costs, expenses, taxes, losses and other expenditures, are deductible when calculating taxable income.
Enterprises shall file prepayment Corporate Income Tax returns and prepay taxes with tax authorities within 15 days after the end of each month or quarter.
Preferential policies for Corporate Income Tax vary by region, industry, and enterprise type. Foreign-invested enterprises may have specific tax incentives. It is recommended to consult professional tax advisors for information specific to your enterprise.
Value Added Tax is a turnover tax levied on entities and individuals selling goods, providing processing, repair and replacement services, selling services, intangible assets, real estate, and importing goods within China.
| Taxpayer Type | Tax Rate | Applicable Scope | Remarks |
|---|---|---|---|
| General Taxpayer - Standard Rate | 13% | Sale or import of goods, provision of processing, repair & replacement services, tangible movable property leasing services | Most common rate |
| General Taxpayer - Reduced Rate | 9% | Transportation, postal services, basic telecommunications, construction, real estate leasing, sale of real estate, transfer of land use rights | For specific industries |
| General Taxpayer - Reduced Rate | 6% | Value-added telecommunications services, financial services, modern services, lifestyle services, sale of intangible assets (excluding land use rights) | Common for service industries |
| Small-scale Taxpayer | 3% | Enterprises with annual taxable sales not exceeding ¥5 million | Temporarily reduced to 1% in 2023 |
| Export Goods/Services | 0% | Export goods, cross-border taxable activities | Export tax rebate policy |
General taxpayers use the general calculation method: Tax payable = Output VAT for the current period - Input VAT for the current period. Small-scale taxpayers use the simplified method: Tax payable = Sales amount × Levy rate.
VAT special invoices can be used to deduct input VAT, while ordinary invoices cannot. Enterprises need to properly manage VAT invoices to ensure compliance.
VAT payment periods are 1 day, 3 days, 5 days, 10 days, 15 days, 1 month, or 1 quarter. Most enterprises file monthly.
VAT is one of the most important taxes in China and has a significant impact on corporate cash flow. Enterprises need to correctly choose taxpayer type and ensure accurate calculation of output VAT and input VAT.
Individual Income Tax is levied on various taxable incomes obtained by resident and non-resident individuals in China. It adopts a tax system combining comprehensive and classified taxation.
| Bracket | Annual Taxable Income | Tax Rate (%) | Quick Deduction |
|---|---|---|---|
| 1 | Not exceeding ¥36,000 | 3% | 0 |
| 2 | Over ¥36,000 to ¥144,000 | 10% | 2,520 |
| 3 | Over ¥144,000 to ¥300,000 | 20% | 16,920 |
| 4 | Over ¥300,000 to ¥420,000 | 25% | 31,920 |
| 5 | Over ¥420,000 to ¥660,000 | 30% | 52,920 |
| 6 | Over ¥660,000 to ¥960,000 | 35% | 85,920 |
| 7 | Over ¥960,000 | 45% | 181,920 |
Taxpayers can enjoy special additional deductions for children's education, continuing education, serious illness medical expenses, housing loan interest, housing rent, and elderly support to reduce taxable income.
Individuals who have a domicile in China, or who have no domicile but have resided in China for 183 days or more cumulatively in a tax year are resident individuals, and their worldwide income is subject to tax in China.
IIT can be withheld and paid by the withholding agent (usually the employer) or self-declared by the taxpayer. Annual reconciliation must be completed between March 1 and June 30 of the following year.
Foreign individuals working in China may enjoy specific preferential tax policies, such as housing subsidies, language training fees, children's education fees, etc., which may be exempt from IIT. Please consult professional tax advisors for specific policies.
Consumption Tax is levied on entities and individuals producing, processing on commission, and importing specific consumer goods within China. Consumption Tax aims to regulate consumption structure and guide consumption direction.
| Tax Item | Tax Rate | Scope of Levy |
|---|---|---|
| Tobacco | 56% + ¥0.003 per stick (Class A cigarettes) | Cigarettes, cigars, cut tobacco |
| Alcohol | 20% + ¥0.5 per 500g (Baijiu) | Baijiu, beer, yellow wine, other alcohol |
| High-end Cosmetics | 15% | High-end beauty, decorative cosmetics |
| Precious Jewelry & Gemstones | 5% - 10% | Gold, silver, platinum jewelry, diamonds, gemstones |
| Refined Oil | ¥1.52 per liter (Gasoline) | Gasoline, diesel, jet fuel, etc. |
| Passenger Cars | 1% - 40% | Different rates based on engine capacity |
| Motorcycles | 3% - 10% | Different rates based on engine capacity |
| Golf Equipment | 10% | Golf balls, clubs, bags |
Consumption Tax is only levied on specific goods; most ordinary consumer goods are not subject to it. If your enterprise is engaged in producing, importing, or selling taxable consumer goods, you need to understand the relevant regulations on Consumption Tax.
In addition to major taxes, operating a business in China requires understanding the following taxes and fees. Their rates and collection methods vary by region and industry.
| Tax Type | Rate/Standard | Scope of Levy | Remarks |
|---|---|---|---|
| Urban Maintenance and Construction Tax | 7%, 5%, 1% | Entities and individuals paying VAT and Consumption Tax | Different rates based on taxpayer location |
| Education Surcharge | 3% | Entities and individuals paying VAT and Consumption Tax | Local education surcharge is usually 2% |
| Stamp Duty | 0.005% - 0.1% | Signing contracts, property transfer documents, etc. | Different rates based on contract type |
| Property Tax | 1.2% or 12% | Property owners | Calculated based on property residual value or rental income |
| Urban Land Use Tax | ¥0.6 - ¥30 per m²/year | Entities and individuals using land in cities, counties, etc. | Varies by land grade and region |
| Land Appreciation Tax | 30% - 60% | Transfer of state-owned land use rights, above-ground buildings and attachments | Progressive rate based on appreciation amount |
| Vehicle and Vessel Tax | Based on vehicle type, engine capacity | Vehicle and vessel owners or managers | Paid annually |
Tax policies may differ across regions, especially in special zones like free trade zones and economic and technological development zones, where there may be additional preferential tax policies. It is recommended to consult local tax authorities or professional tax advisors.
| Tax Type | Standard Rate | Taxpayer | Tax Base | Filing Frequency | Main Preferential Policies |
|---|---|---|---|---|---|
| Corporate Income Tax | 25% | Enterprises | Taxable Income | Quarterly prepayment, Annual reconciliation | High-tech enterprises 15%, SME benefits |
| Value Added Tax | 13%, 9%, 6% | Enterprises, Individuals | Value Added | Monthly/Quarterly | Small-scale taxpayer benefits, Export rebates |
| Individual Income Tax | 3% - 45% | Individuals | Comprehensive Income | Monthly withholding, Annual reconciliation | Special additional deductions, Foreigner benefits |
| Consumption Tax | 1% - 56% | Producers, Importers | Sales Amount/Quantity | Monthly/Quarterly | Export exemption |
| Urban Maintenance & Construction Tax | 7%, 5%, 1% | VAT & Consumption Tax payers | VAT & Consumption Tax amount | Same as VAT | Small-scale taxpayer 50% reduction |
| Stamp Duty | 0.005% - 0.1% | Contract parties | Contract amount | Upon occurrence | SME reductions & exemptions |
China's tax system is complex and constantly changing. Our professional tax team can provide you with personalized tax planning, compliance services, and tax optimization solutions to ensure your business operations in China run smoothly.
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