I. Major preferential policies for foreign-invested company
1. Company can enjoy preferential income tax for its recognized and encouraged industries and projects.
2. High-tech company recognized by the State pays enterprise income tax at a rate of 15%.
3. For enterprise income derived from the project of public infrastructure construction recognized by the State, the enterprise will be entitled to tax exemption and reduction.
4. For enterprise income derived from utilizing resources comprehensively and manufacturing products in line with industrial policies of the State, the taxable income will be deducted accordingly.
5. Enterprise spending on equipment of environmental protection, energy and water saving, work safety is tax-deductable pro rata.
6. Property tax can be exempted for three (3) years in the event of building or buying properties in China by foreign-invested companies.
II. Taxation policy for imported equipment
1. For imported machinery and equipment purchased within the total investment of the company and that conforms to the encouraging category as stated in the Catalogue for the Guidance of Industries for Foreign Investment, tariff and import VAT can be exempted (exclusive of commercial products stated on Catalogue of Imported Goods Without Exemption for Foreign-invested Projects).
2. Imported machinery and equipment for self-use and processing trade by foreign-invested companies which is funded by loans from foreign government(s) and/or international financial organization(s), will be exempted from tariff and import VAT (exclusive of commercial products stated on the Catalogue of Imported Goods Without Exemption for Foreign-invested Projects).
3. For technological advancement of the established foreign-invested enterprises conforming to the encouraging category and restricted category II, foreign-invested research and development centers, the advanced technological and export foreign-invested companies, the technology, accessories, spare parts imported due to the dissatisfaction in terms of production or function from the domestic ones, can be exempted from tariff and import VAT in accordance with the Notification of Adjusting Imported Equipment Tax Policy by National Council (Paper: Guo Fa 37).
III. Income tax credits from equipment made in China
In the case where the foreign-invested companies that are registered under Chinese jurisdiction purchase the equipment made in China within its total investment amount, provided that the equipment conforms with the encouraging category inside the Catalogue for the Guidance of Industries for Foreign Investment as stipulated in the Notification of Adjusting Imported Equipment Tax Policy by National Council (Paper: Guo Fa 37) (exclusive of those listed on the Catalogue of Imported Goods Without Exemption for Foreign-invested Projects), 40% of the purchase price can be deductable from the enterprise taxable income for no more than five (5) years.
IV. Foreign-invested R&D Center encouraged by the State
1. The imported technology, accessories, spare parts purchased within the total investment amount for the enterprise’s own use, provided that the purchased products do not constitute a lab at production scale (exclusive of those listed on the Catalogue of Imported Goods Without Exemption for Foreign-invested Projects), can be exempted from tariff and import tax.
2. The imported technology, accessories, spare parts purchased via the enterprise’s own capital for the purpose of technological transformation within the approved business scope, the corresponding tariff and import tax can be exempted.
3. The income derived from transfer of self-developed technology can be exempted from business tax.
4. In the event that the technology research expenditure increases by more than 10% (inclusive of 10%) from the previous year, 50% of the actual technology research expenditure of the year can be deducted from the taxable income with approval of the tax bureau.
V. Technology Center and Technology Innovation encouraged by the State and Guangdong Province
1. For the industrial structure adjustment project recognized as a provincial-level enterprise technology center in Guangdong Province, the Guangzhou Economic and Trade Committee will grant financial support amounted to CNY 2 million. For those recognized as national-level enterprise technology center, the enterprise will be entitled to exempted VAT and tariff as well as funding support for innovative capability development amounted to CNY 3 million.
2. The technology research expenditure for new product, technology and technique incurred by domestic and foreign-invested enterprises, can be fully deducted, and 50% of the actual expenditure can be further deducted from enterprise taxable income for the taxable year in which the expenditure incurs.
VI. Hi-tech company
1. For the newly-established high-tech companies located in the National Hi-Tech Industrial Development Zone, the enterprise income tax can be exempted for two (2) years from the year when the enterprise starts to make profit and can be paid at a rate of 15% thereafter.
2. After the enterprise operation kicks off, its profit year commences from the taxable year with profit made. In the event of losses made at the beginning of operation, the tax payable can be carried forward as permitted by relevant taxation regulations and paid up until the enterprise starts to make profit. Its profit year counts after the entire carried-forward taxes are paid up with residual profit retained.
VII. Software and integrated circuit enterprise
1. From Jun 24th, 2000 to end of 2010, general VAT payers who sell their self-developed software would pay the VAT at a mandatory rate of 17% and would be further entitled to tax reimbursement for the portion of actual VAT that exceeds 3%.
General VAT payers who sell their self-developed integrated circuit products (including monocrystalline silicon) would pay the VAT at a mandatory rate of 17% and would be further entitled to tax reimbursement for the portion of actual VAT that exceeds 6%.
2. For the new software companies established under Chinese jurisdiction, upon recognition, their enterprise income tax can be exempted for the first two (2) years and halved for the subsequent three (3) years since the taxable year when the enterprise starts to make profit.
VIII. The Guangzhou headquarter economy at municipal and local level
1. The Guangzhou Municipal Government would award the qualified headquarter with cash prize amounted to CNY 5 million; Once it is recognized as a qualified local headquarter, the Guangzhou Municipal Government would award CNY 2 million.
2. If the headquarter purchases or builds office building (exclusive of attached properties) for self-use, CNY 1,000 per square meter of subsidy based on the building construction area for office use can be granted, payable in installments in three (3) years; lease expenditure can be subsidized with 30% allowance of the standard rent released by the municipal housing management department.
3. Upon approval from the Guangzhou Municipal Government, the headquarter or local headquarter can be entitled to a full or partial deduction as to its local income tax.
4. The headquarter or local headquarter can be exempted from urban property tax for three (3) years upon the completion or purchase of the property.
5. Headquarters and local headquarters that engage investments in establishing research institutes, technology transfer, technology development business and any consulting and serviced in relation are exempted from enterprise income tax, where income is made.
6. For headquarters and local headquarters that fall into the State’s encouraging industries of foreign-invested companies, the equipment imported for self-use (exclusive of those without exemption as stipulated otherwise by the State) which is purchased within the total investment amount of the enterprise, can be exempted from tariff and import VAT.