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The Corporate Income
Tax Law (Draft) has been filed to the National People's Congress
(NPC) for discussion. Some main points are extracted as per below:
1 To unify the Corporate
Income Tax Rate for domestic enterprises and foreign-invested enterprises
(FIEs). The new tax rate is 25%.
The draft bill adopts the following preferential tax policies:
a) Apply 20% tax rate to the eligible small-sized enterprise with
slight profit.
b) Apply 15% tax rate to the key supporting Hi-tech enterprises
c) Enlarge the preferential tax policy for business starters and
enterprises who invest in environmental protection, water and energy
saving and work safety.
2 Cancel the following preferential tax policies
a) "Tax exemption on first 2 years and 50% tax deduction on
the latter 3 years" for manufacturing FIEs
b) 50% tax deduction for FIEs whose products are mainly for export.
3 Grant a grace period for the enterprises who are currently enjoying
preferential tax policy. In order to lessen the tax liability to
the existing FIEs, the draft bill grant a 5-year grace period to
the enterprise who has been allowed to pay the income tax at a preferential
rate under the tax law and regulation stipulated before the proposal
of this draft bill. The new tax rate will be applied gradually in
5 years after this bill has been come into effect. Existing FIEs
entitled to a fixed-period of tax reduction / exemption under the
former law can continue to enjoy the tax incentives for the remaining
period. However, for those FIEs who has not made a profit and thus
has not enjoyed the incentives, the tax exemption and reduction
period will be calculated from the year when the new tax law implemented.
The draft bill also stipulated that the actual implementation of
the grace period is subject to confirmation of the State Council.
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