GENERAL INFORMATION ON FOSHAN’S TAX STRUCTURE

    The tax system is quite complicated in China, ATA will give some timely advice and help you deal with tax formalities. In China we have BUSINESS TAX and PROFIT TAX for consultancy and technology companies, VALUED ADDED TAX(VAT), IMP/EXP TAX and PROFIT TAX for manufacturing or trading companies. The business tax is 6% based on the business volume, while the profit tax ranges from 15% to 33%, depending on different regions, Here are some tips from ATA on Foshan’s tax structure:
※ For foreign-funded projects, encouraged by the local governments, the imported equipment for self-use within the gross investment (including the technology, components and spare parts imported with the equipment), shall be exempted from import tariffs and import stage value -added tax.For foreign-funded enterprise which purchase domestic equipment within the gross investment and the equipment belong to the range of tax-free catalogue, the value-added tax of domestic equipment will be refunded.
※ For manufacturing foreign-funded enterprises with an operation period over 10 years, starting from the first year of profit-making, their profit tax for the first year and the second year shall be exempted from and that for the third to the fifth year shall be reduced by 50% .The local income tax shall be exempted from for tax exemption or reduction period. Annual loss of foreign-funded enterprise can be made up with the income of next financial year. In case of insufficiency, it may be continued to make up for the lose by years. But it cannot exceed 5 years at longest.
※ Foshan city implemented the preferential taxes of coastal economic open area. The enterprise income tax of manufacturing foreign-funded enterprises shall be levied at the rate of 24% . The profit tax of the following foreign-funded enterprises shall be levied at the rate of 15%, (1) Projects falling into the category of technologically-intensive and knowledge-intensive projects, (2) Projects with over USD 30 million of foreign investment and the cycle of investment recovery is long. (3) Projects of energy, transportation and harbor construction.
※ The foreign investor in a foreign-funded enterprise using its share of profit to directly reinvest in that enterprise, expand the registered capital or to fund the setting up of other foreign-funded enterprise in China for a period of not less than 5 years, at the application of the investor and with the approval of taxation authorities, may be refunded 40% of the income tax already paid on the invested portion.
※ For the approval product-exporting enterprises launched by foreign investors, after the expiration of the enterprise income tax exemptions and reductions enjoyed by them in line with tax laws, if their annual export value exceeds 70% of their output that year, they may have their enterprise income tax reduced by half. The local income tax of that year shall be exempted from accordingly. Besides, if the foreign investor uses its profit derived from the foreign- funded enterprise to launch or expand a product-exporting enterprise in China for a period of not less than 5 years, at the application of investor and with the approval of taxation authorities, the investor may be refunded 100% of the enterprise income tax already paid.
※ For the approval technologically-advanced enterprises launched by foreign investors, if they still are technologically-advanced enterprises after the expiration of the income tax exemption and reduction periods according to tax laws, they may have their enterprise income tax reduced by half for another three years based upon the tax rates as provided for in tax laws.The local income tax shall be exempted from accordingly.
Besides, if the foreign investor uses its profit derived from the foreign-funded enterprise to launch or expand a technologically-advanced enterprise in China for a period of not less than 5 years, at the application of the investor and with the approval of taxation authorities, the investor may be refunded 100% of the income tax already paid.
※ For foreign-funded enterprise which R & D expense is increased 10% (include 10%) over last year, with the approval of taxation authorities, the taxable income amount of that year should be allowed to deducted the 50% of real R & D expense again. Besides aforesaid policies, the foreign-funded enterprise established in Foshan National Hi-tech Industries Development Zone may enjoy the following preferential policies:
※ The profit tax rate imposed on the approval hi-tech enterprises in the Development Zone shall be 15%.
※ Newly established hi-tech enterprises in the Development Zone, at the application of investor and with the approval of taxation authorities, shall be exempted from profit tax for two years starting from the year of production commencement.
※ For hi-tech enterprise in the Development Zone, the imported hi-tech products, samples and sample machines, etc, used to disassemble or test, upon Development Zone authorities and customs approval, shall be exempted from tariff. The aforesaid samples and sample machines cannot be used to the others, transfer or sale.
※ When recruiting technical personnel of middle technical titles or above (including master’s degrees or above received abroad) in the country or from foreign countries, hi-tech enterprises in the Development Zone shall be exempted from paying city expansion fees.
※ Personal Income Tax: In Foshan personal Income Tax ranges from 5% to 45% with 9 levels at the base of RMB500 yuan extending to 100000 per month.
※ Technical and business personnel of the hi-tech enterprises in the Development Zone may apply for passports going abroad and multi-entry certificates to Hong Kong and Macao for business purposes