China Corporate Tax Compliance Services

Tax violations can have very serious consequences in China. Those reaching the range set forth in criminal law will be considered a crime for which criminal liability can be imposed. The increasing complexity of tax compliance has left many businesses facing multiple challenges. 3E Accounting provides China corporate tax compliance services to assist your business in meeting compliance requirements and reducing tax risks in the evolving tax environment.

China’s tax system

The China taxation system is organized into four levels: the State Administration of Taxation, State Taxation Bureaus (autonomous region, municipality), Provincial Local Taxation Bureaus (city, state, league), and State Taxation Bureaus at the county level (city, counties).

The tax rate of enterprise income tax is based on the statutory rate for calculating the taxable amount of enterprise income tax, which is generally 25%. For qualified small, low-profit enterprises, the corporate income tax is levied at a rate of 20%. In addition, high-tech enterprises that are supported by the state are entitled to a lower tax rate of 15%.

Meanwhile, China’s corporate income tax adopts dual jurisdiction, dividing enterprises into resident and non-resident enterprises with different tax obligations.

1. A resident enterprise is one that is legally established in China (for more information, see registering a company in China) or one that is legally established in another country but has its actual management in China.

A resident business must pay corporate income tax on all of its income, no matter where it comes from.

2. Non-resident enterprise: an enterprise established under foreign law with its actual management organization not located in China, regardless of whether it has set up an institution or place in China and has income derived from within China.

A non-resident enterprise must pay corporate income tax on the income derived from its establishment or place in China as well as on the income generated outside of China that is physically connected with its establishment or place.

About Tax Return

The taxable year is from January 1 to December 31 of the Gregorian calendar. If a taxpayer opens a business in the middle of a taxable year or if the actual operation period of the taxable year is less than 12 months due to factors such as merger or closure, the actual operation period shall be taken as a taxable year; and when a taxpayer is liquidated, the liquidation period shall be taken as a taxable year.

The corporate income tax is prepaid monthly or quarterly, and the enterprise must submit the corporate income tax return to the tax authority within 15 days from the end of the month or quarter, regardless of profit or loss, and prepay the tax. At the same time, within 5 months from the end of the year, the enterprise must submit the annual corporate income tax return to the taxation authority and settle the tax payable and refundable. According to the rules, when the corporate income tax return is filed, the financial accounting report and any other relevant information must be attached.

Corporate Income Tax Rate Table

The types of corporate income tax include income tax of state-owned enterprises; income tax of collective enterprises; income tax of private enterprises; income tax of Sino-foreign joint ventures; income tax of foreign enterprises; and income tax of foreign-invested enterprises.

The following is a brief description of the differences between the tax rates for each category.

Category	Form / Scope of Application	Tax Rate
State-owned Enterprises Income Tax	A unified income tax system for domestic enterprises has been implemented. This stipulates that all enterprises or organizations that independently account for their respective financial results in the People’s Republic of China are taxpayers of corporate income tax.	33%
Collective Enterprises Income Tax	The income tax of collective enterprises is combined with the income tax of state-owned enterprises and the income tax of private enterprises, and the income tax of domestic enterprises is levied uniformly.	33%
Private Enterprise Income Tax	Taxpayers are private businesses in the military industry, construction, transportation, commerce, catering, and other fields, both in cities and in rural areas. These are for-profit organizations with more than 8 employees whose assets are privately owned. The tax is based on the total income for each year, after deducting the costs, expenses, and taxes allowed by the state to be charged to income, and the balance after non-operating expenses.	35%
Sino-foreign joint ventures Income Tax	The taxpayers are foreign joint ventures and foreign joint venture partners of Sino-foreign joint ventures. The object of taxation is the income from the production and operation of the joint venture, which also includes other income. Other income refers to income from dividends, bonuses, interest, transfers of property, and the provision of items such as patents, proprietary technology, trademark rights, and copyrights.	30% Another 3% local income tax is levied on the taxable income. A 10% income tax shall be levied on the remittance amount when the foreign joint venture’s profits from the enterprise are remitted abroad.
Foreign corporate income tax	A progressive tax rate is applied. There are 5 levels according to the amount of income.	The lowest level is 20% for annual income up to $250,000, while the highest level is 40% for annual income over $1,000,000. * A 10% local income tax is levied on the taxable income.
Income Tax for Foreign Invested Enterprises	Foreign-invested enterprises with their head offices in China are taxed on all income derived from within and outside China; foreign enterprises are taxed only on their income derived from within China.	30%. Calculated on the basis of taxable income. Local income tax of 3%, totaling 33%.

Why Choose 3E Accounting For Corporate Tax Compliance Services?

Regardless of the nature and size of the business, our experienced tax specialists provide comprehensive tax services according to the needs and realities of the business. Our tax specialists have a wealth of expertise and are familiar with the China tax system and keep abreast of the tax incentives offered by the local government for various industries. Let us help you! We can help you make the best use of your resources, save money, and avoid risks so that you can spend your valuable time focusing on your expansion.

China Corporate Tax Compliance Services