The People’s Republic of China Tax Facts and Figures The People’s Republic of China Tax Facts and Figures Foreword T his booklet has been prepared to provide the reader with an overview of taxes levied in the People’s Republic of China.It is not intended to cover exhaustively the subjects it addresses but rather to answer some of the important, broad questions that may arise for the reader.When specific issues arise in practice, it will often be necessary to refer to the laws, regulations and interpretations of the PRC.Since the laws and regulations are still evolving and are not always uniformly interpreted, it is advisable to obtain appropriate professional advice. If you would like more information on any of our services described on pages 24 to 25, please contact one of our specialists listed at the back of this booklet. The commentary in this booklet does not cover taxes levied in Hong Kong, which became a Special Administrative Region of the PRC on 1 July 1997.Hong Kong continues to retain its own tax system and the taxes applicable in mainland China do not apply in Hong Kong. Contents PagePagePagePagePage TTTTTax administrationax administrationax administrationax administrationax administrationTTTTTax filing and paymentax filing and paymentax filing and paymentax filing and paymentax filing and payment–Enterprise income tax1 –Individual income tax1 ForForForForForeign Investment Enterprises andeign Investment Enterprises andeign Investment Enterprises andeign Investment Enterprises andeign Investment Enterprises andForForForForForeign Enterpriseseign Enterpriseseign Enterpriseseign Enterpriseseign Enterprises –Enterprise income tax2 –Local income tax2 –Concessionary tax rates3 Special Economic Zones3 Economic and Technological Development Zones3 Old Urban Districts of SEZs and ETDZs and4 Coastal Open Economic Zones Hi-Tech Industry Development Zones4 Bonded Zones4 Shanghai Pudong New Area4 National Tourism Areas5 Other areas5 Production5 Oil, natural gas, rare metals and precious metals5 Agriculture, forestry and animal husbandry5 Technologically advanced and5 export-oriented enterprises Harbour and wharf construction6 Financial institutions6 Representative offices6 –Tax refund on reinvestment6 –Investment restrictions on foreign investors7 –Special deductions and other matters8 Depreciation8 Intangibles9 Pre-operating expenses9 Management fees9 Interest on loans9 Entertainment9 Foreign social insurance premiums10 Bad debts10 Inventory valuation10 Loss carryovers11 Treatment of dividends11 Related party transactions11