Page 30 - Doing Business in China

TAXATION

c) Temporary exemption
Customs may grant temporary exemption treatment for Temporary Import/Export Commodities� These
commodities must be reshipped out of or into the customs territory within six months� A guarantee letter or
security deposit of an amount equivalent to the customs duty must be submitted to Customs�

Items that qualify for temporary exemption include trade samples, exhibits, engineering equipment, vehicles
and vessels for construction, instruments and tools for installation, cinematographic and television apparatus,
containers, theatrical costumes and paraphernalia�

d) Payment of customs duties
The payer or its agent shall make a timely customs declaration and settle the customs duty within 15 days
after the issuance date of the customs duty payment certificate� Late payment will be subject to a penalty of
0�05% daily on the overdue customs duties�

ENTERPRISE INCOME TAX (EIT)
Resident enterprises must pay the EIT on their worldwide income� Foreign companies with an establishment
need to pay the income tax associated with that establishment� Foreign companies without an establishment are
subject to EIT on income they earn within China��

a) Tax calculation
Tax liability = [Total revenue – Non-taxable revenue – Tax-exempt revenue – Costs – Expenses – Losses] x
Applicable tax rate – Allowable reductions/exemptions – Tax credit
• The standard tax rate is 25%� For high and new technology enterprises, the tax rate is 15%�
• Withholding tax rates vary depending on the country� In most cases, the rate is 10%, but in some countries,
it may differ�
• Tax reductions are available for environmentally friendly projects�

b) Tax registration
Enterprises are required to register with the local tax authorities within 30 days from the date of obtaining the
business licence or business registration certificate�

A non-resident enterprise carrying out contractual projects or providing services in the territory of China shall
register with the tax authorities of the country where the project is located within 30 days of the completion
of the project/service contract�

c) Tax credit
A tax credit will be allowed on the
amount of income tax actually paid
by the enterprise outside China (in
accordance with foreign tax laws)
on income derived by the enterprise
outside China� However, the amount
of tax credit should not exceed the
amount of China income tax payable on
the foreign-sourced income� Any excess
tax credits can be carried forward for a
maximum period of five years�

Doing Business in China 2023 | 29