Three Special Areas Designated For Preferential Corporate Income Tax Rates

JD
Jones Day

Contributor

Jones Day is a global law firm with more than 2,500 lawyers across five continents. The Firm is distinguished by a singular tradition of client service; the mutual commitment to, and the seamless collaboration of, a true partnership; formidable legal talent across multiple disciplines and jurisdictions; and shared professional values that focus on client needs.
The China State Council has approved three special areas to promote economic cooperation between the Chinese Mainland and Hong Kong, Macau, and Taiwan.
China Tax

In recent years, the China State Council approved three special areas to promote economic cooperation between the Chinese Mainland and Hong Kong, Macau, and Taiwan. These areas are Hengqin New Area, Qianhai Shenzhen-Hong Kong Services Industry Cooperation Zone, and Pingtan Comprehensive Experimental Zone. Qualified enterprises established in the three areas may enjoy a 15 percent corporate income tax ("CIT") rate, compared to the normal 25 percent CIT rate. The Ministry of Finance and State Administration of Taxation jointly issued Cai Shui [2014] No. 26 on March 27, which clarified the policies for the CIT incentive. Three CIT incentive catalogues were issued, each for one of the three special areas. The catalogues list industry sectors that are eligible for the tax incentives. To be eligible for the 15 percent CIT rate, the main business of the enterprise must falls within the industry sectors listed in the relevant catalogue, which means that more than 70 percent of the total revenue of the enterprise must be derived from one or more listed sectors. Furthermore, if an enterprise has establishments located both inside and outside the special areas, only income derived by the establishments from within the special areas is eligible for the reduced CIT rate. The tax notice is effective for the period from January 1, 2014 to December 31, 2020.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More