Overview of Tax in China
As the second largest economy in the world, China is drawing increasing global investors. In order to run your business in the most efficient manner, you should be aware of the potential tax implications before incorporating a China company such as a WOFE/WFOE, and needless to say, after your China Company has been established. Here we run an overview of major taxes applicable to foreign investors as listed:
China Income Tax
Corporate income tax (CIT): the standard tax rate is 25%, but if your company engages in High
Tech industries that are encouraged by the government, then your tax rate can be reduced to 15%. Tax holiday is applicable to certified high tech enterprises.
Individual income tax (IIT) - progressive rates range from 3% to 45%.
China Turnover Tax (Tax on Transactions)
Business tax – The standard tax rates range from 3% to 20%. Applicable to sales of real estate in China, provisions of services (excluding replacement, processing and repair services), and transfer of intangible assets .
Value-added tax (VAT) – applicable to the sale of all goods (excluding real estate sales).The standard tax rate is 17%. Certain necessities are taxed at 13%.
Other China Taxes
Land appreciation tax
Real estate tax
Vehicle and vessel tax
Motor vehicle acquisition tax
Tax levied by the