Companies and natural persons in China need to observe and to respect the taxation structure in China, whether if the corporations were established with foreign capital or not. Due to a prosperous business environment, a consistent and flourishing economy, China aligns with the most popular investment destinations worldwide and offers equal rights for nationals and foreigners willing to enlarge their portfolios on the Chinese market. Before establishing the company and the priorities, we suggest you get in touch with our company formation agents in China and ask for support in incorporation and tax matters.
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What is the corporate tax in China?
The corporate tax in China ranges between 10% and 25%, depending on the type of business, whether it is small, medium or large. Because the government sustains the development of certain regions from an investment point of view, investors from abroad who set up companies in such provinces can pay a fixed corporate tax of 15% rate. Moreover, top technologized enterprises in China can also benefit from a favorable tax regime and a small corporate tax rate. Companies with establishments in China are seen as taxpayers and must align with the local legislation in this sense. Moreover, if companies generate profits without having a permanent establishment in China, these are subject to taxation.
For a better understanding of the taxation structure in China and the categories in which your company aligns, we invite you to ask our Chinese company formation representatives.
What is the VAT tax in China?
The standard VAT in China is set at 17% as recently revised, and it is compulsory for several goods and service offered in the Chinese market. The import of goods is also subject to the 17% VAT rate in China. Food products in China are levied with a VAT of 13% rate. Logistics and transportation, real estate, and communication services are subject to a 10% VAT rate. Please bear in mind the following VAT rates in China:
- a VAT rate of 10% for catering services, and postal services;
- a VAT rate of 6% for financial services and insurance in China;
- the city maintenance and construction is levied with a 6% VAT rate;
- construction services and Chinese National Education are subject to a 3% VAT rate.
Other important taxes in China
Foreign entrepreneurs can benefit from the provisions of double tax treaties signed by China in order to avoid the double taxation. As for the withholding tax in China, this is imposed on dividends and royalties which are paid by the foreigners in this country, and it is established at a rate of 10%. The real estate tax is set at 11% rate.
Are there tax exemptions in China for foreigners?
It is good to know that foreign investors in China can benefit from several tax exemptions like the Urban and Township Land Use Tax and the City Maintenance and Construction Tax. For in-depth information about the tax exemptions in China, you may address to our company incorporation specialists in China.
Please do not hesitate to contact our team of company incorporation specialists in China for complete support in taxation matters and company formation.