Corporate Income Tax Law and Practice in the People's Republic of China2025|PDF|Epub|mobi|kindle电子书版本百度云盘下载

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1. Introduction1

1.1 Legal Framework---Sources of Law and Regulations and Their Implementation1

1.1.1 Tax Laws1

1.1.2. Tax Regulations Issued by the State Council2

1.1.3. Tax Regulations Issued by the MOF and the SAT3

1.2 Development of Corporate Income Tax System8

1.2.1. 1949-1980: Early Taxation System of New China8

1.1.1. 1980-1990: Multiple Tax Systems in Early Years of China's Open Door Policy and Economic Reform9

1.2.3. Tax Reforms of 1991 and 1993--Two Corporate Income Tax Systems10

1.2.4. Tax Reform of 2007--Unification of Two Tax Systems11

2. Taxpayers13

2.1 Resident Enterprise13

2.1.1. Enterprises Organized under Chinese Laws14

2.1.2. Enterprises Organized under Foreign Laws20

2.2 Non-Resident Enterprise22

2.2.1 Foreign Company Carrying on Trade or Business in China23

2.2.2. Foreign Company Receiving Income from China That is not Connected with Establishment in China26

2.2.3. Representative Office of Foreign Enterprise27

3. Tax Base and Rate31

3.1 General31

3.2 Small Scale Enterprises with Low Profitability32

3.3 Deemed Profit Rate and Deemed CIT33

3.3.1. Resident Enterprise33

3.3.2. Non-Resident Enterprise with Establishment in China36

3.3.3. Foreign Representative Office39

3.4 Non-Resident Enterprise without Establishment in China42

4. Income44

4.1 Revenue from the Sale of Goods45

4.2 Revenue from the Provision of Services47

4.3 Revenue from Transfer of Property49

4.4 Dividends52

4.5 Interest Income53

4.6 Rental Income54

4.7 Royalties56

4.8 Donation Income57

4.9 Income from Real Estate Development58

4.10 Other Revenue62

5. Deductions65

5.1 Inventories66

5.2 StaffExpenses66

5.2.1. Salary and Wages66

5.2.2. Pension and Insurance Premiums68

5.2.3. StaffWelfare Expenses68

5.2.4. Labor Union Fund Contributions69

5.2.5. StaffEducation Expenses70

5.3 Entertainment Expenses71

5.4 Interest Expenses71

5.5 Research and Development Expenses77

5.6 Leasing Expenses78

5.7 Management fees78

5.8 Donations79

5.9 Sponsorship Expenses82

5.10 Advertising Expenses83

5.11 Foreign Exchange Losses84

5.12 Dividends84

5.13 Penalties85

5.14 Provisions85

5.14.1. Provisions for Loan Losses for Financial Institutions86

5.14.2. Reserves for Institutions that Provide Credit Guarantee for Small- and Medium-Sized Enterprises88

5.14.3. Provisions for Securities Companies89

5.14.4. Reserves for Insurance Companies91

5.15 Deduction of Reinsurance Claims93

5.16 Commission Expenses93

5.17 Asset Losses94

5.17.1. Time of and Approval for Deduction94

5.17.2. Evidence of Asset Losses96

5.17.3. Recognition of Monetary Asset Losses98

5.17.4. Recognition of Non-Monetary Asset Losses100

5.17.5. Recognition of Debt Investment Losses106

5.17.6. Recognition of Equity Investment Losses111

5.17.7. Loss of Managed Investment112

5.17.8. Loss on Guarantee112

5.17.9. Non-Deductible Losses112

5.18 Expenses of Real Estate Development113

5.18.1 Maintenance Costs113

5.18.2. Common Facilities114

5.18.3. Financial Charges and Commission115

5.18.4. Other Expenses115

5.18.5. Calculation of Tax Basis115

5.19 Net Operating Losses119

5.20 Taxes120

6. Depreciation and Amortization121

6.1 Fixed Assets121

6.1.1. Tax Basis122

6.1.2. Normal Depreciation Method and Recovery Periods123

6.1.3. Accelerated Depreciation124

6.2 Biological Assets126

6.3 Oil and Gas Enterprises127

6.3.1. Expenses of Acquisition of Exploration Right127

6.3.2. Exploration Expenses127

6.3.3. Depreciation of Development Assets128

6.3.4. Abandonment Costs129

6.4 Intangibles130

6.5 Long-Term Deferred Expenses131

6.6 Pre-operating Expenses132

7. Mergers and Acquisitions133

7.1 General133

7.2 Classification of Reorganizations134

7.3 Parties to Reorganization and Date of Reorganization135

7.4 Ordinary Reorganizations136

7.4.1. Change of Legal Forms of Enterprise136

7.4.2. Enterprise Debt Restructuring137

7.4.3. Stock Acquisition138

7.4.4. Asset Acquisition141

7.4.5. Merger144

7.4.6. De-merger146

7.4.7. Documentation and Filing Requirements151

7.5 Special Reorganization153

7.5.1. Common Requirements to Qualify as Special Reorganization153

7.5.2. Debt Restructuring155

7.5.3. Stock-to-Stock Transaction157

7.5.4. Stock for Asset Transaction160

7.5.5. Mergers161

7.5.6. De-merger165

7.5.7. Consideration Other than Qualified Stock168

7.5.8. Cross-Border Reorganization172

7.5.9. Step Transactions178

7.5.10. Filing Requirement179

7.6 Tax Incentives Existing Prior to Transaction183

7.7 Contribution of Assets in Enterprise Formation187

7.8 Financing Acquisition188

7.8.1. Debt at the Subsidiary Level188

7.8.2. Debt at the Parent Level189

7.9 Indirect Transfer of Resident Enterprise by Non-Resident Enterprise190

7.10 China Implem entation of Global Mergers and Acquisitions191

7.10.1. Global Merger with Direct China Subsidiaries192

7.10.2. Global Merger with Indirect China Subsidiaries192

7.10.3. Taxable Asset Acquisition193

7.10.4. Taxable Stock Acquisition194

7.11 Consideration of Taxes Other than CIT195

7.11.1. Value Added Tax195

7.11.2. Business Tax200

7.11.3. City Maintenance and Construction Tax and Education Surcharge201

7.11.4. Land Appreciation Tax202

7.11.5. Deed Tax202

7.11.6. Stamp Duty203

7.11.7. Customs Duty204

8. Tax Incentives205

8.1 Agriculture, Forestry, Animal Husbandry, and the Fishery Industry205

8.2 Public Infrastructure206

8.3 Environmental Protection and Resources Conservation208

8.4 Super Deduction of Research and Development Expenditures210

8.5 Technology Transfer211

8.6 High and New Technology Enterprises213

8.6.1. Qualifications214

8.6.2. Application Procedures219

8.6.3. Application for Tax Incentives221

8.7 Software and Integrated Circuits222

8.8 Animation Enterprises223

8.9 Venture Capital Investment Enterprises225

8.10 Clean Development Mechanism Projects227

8.11 Service Outsourcing Business228

8.11.1. Scope of Advanced Technology Services229

8.11.2. Qualification for Advanced Technology Service Enterprises231

8.11.3. Procedures for Recognition of Advanced Technology Service Enterprises232

8.12 Employment of Disabled Personnel232

8.13 Culture Enterprises234

8.14 Rural Finance235

8.15 Transition Rules for Tax Incentives Granted under Old Tax Law and Regulations236

8.16 Local Tax Incentives239

9. Income from Foreign Countries and Regions241

9.1 Taxable Income from Foreign Country or Region241

9.1.1. Computation of Taxable Income of Foreign Branch242

9.1.2. Computation of Taxable Income from Other Foreign Sources243

9.1.3. Foreign Sourced Income of Non-Resident244

9.1.4. Allocation of Common Expenses244

9.2 Foreign Tax Credit245

9.2.1. Creditable Taxes245

9.2.2. Direct Foreign Tax Credit247

9.2.3. Indirect Foreign Tax Credit248

9.2.4. Limitations on Foreign Tax Credit254

9.2.5. Simplified Method258

9.2.6. Sparing Tax Credit260

9.2.7. Documentation for Claiming Foreign Tax Credit261

9.3 Controlled Foreign Corporation262

9.4 General Anti-Avoidance Provision264

10. Income Tax Treaties266

10.1 Legal Authority and Interpretations of Tax Treaties266

10.2 Treaty Network268

10.3 Resident272

10.4 Beneficial Owner274

10.5 Permanent Establishment276

10.5.1. Definition276

10.5.2. Work Site of Construction, Assembly, and Installation277

10.5.3. Provision of Services278

10.5.4. Preparatory and Auxiliary Activities280

10.5.5. Conclude Contracts by Non-Independent Agent282

10.5.6. Independent Agent283

10.5.7. Relationship between Parent and Subsidiary284

10.6 Dividends, Interest, and Royalties285

10.7 Capital Gains282

10.8 Elimination of Double Taxation303

10.9 Non-Discrimination304

10.10 Mutual Agreement Procedures305

10.11 Exchange of Information305

10.12 How to Obtain Treaty Benefits310

10.12.1 Claims for Treaty Benefits for Dividend, Interest, Royalty, and Gains on Transfer of Properties311

10.12.2. Claims for Benefits under Other Treaty Provisions314

10.12.3. Record Retention, Examination, and Penalties315

11. Transfer Pricing317

11.1 General Principle317

11.2 Related Parties318

11.3 Types of Transactions Covered320

11.4 Transfer Pricing Methodologies320

11.4.1. Comparable Uncontrolled Price Method321

11.4.2. Resale Price Method323

11.4.3. Cost-Plus Method323

11.4.4. Transaction Net Margin Method324

11.4.5. Profit Split Method325

11.5 Reporting and Contemporaneous Documentation326

11.5.1. Annual Filing326

11.5.2. Contemporaneous Documentation326

11.6 Transfer Pricing Audit and Adjustment329

11.7 Advance Pricing Arrangement (APA)332

11.8 Cost-Sharing Agreement (CSA)339

11.9 Corresponding Adjustments and International Negotiation342

11.10 Penalties, Interest, and Statute of Limitation343

12. Withholding of Tax at Source345

12.1 Income not Effectively Connected with Establishment in China345

12.3 Interest Paid to Foreign Bank and Foreign Branch349

12.3 Income of Foreign Service Providers349

12.4 Withholding on Payment to Individuals350

12.5 Penalties on Withholding Agent351

12.6 Enforcement in Conjunction with Foreign Exchange Regulations351

13. Liquidation354

13.1 Definition354

13.2 Tax Year356

13.3 Treatment to Liquidating Company357

13.4 Treatment to Shareholders359

13.5 Tax Withholding on Liquidation361

13.6 Liquidation of Company Whose Shares are Traded on Stock Exchanges362

14. Tax Filings and Payments364

14.1 Tax Bureaus364

14.2 Tax Registration368

14.3 Provisional Tax Filing and Payment370

14.4 Annual CIT Filing377

14.5 Translation of Foreign Currency378

14.6 Filing of Withholding Tax378

14.7 Interest and Penalties379

14.7.1. Late Payment Charge and Interest379

14.7.2. Administrative Penalties380

14.7.3. Criminal Penalties381

14.8 Statute of Limitation382

14.9 Confidentiality of Tax Information383

15. Tax Audit and Appeal385

15.1 Offices in Charge of Tax Audit385

15.2 Types of Tax Audits386

15.3 Procedures of Tax Audits387

15.3.1. Jurisdiction of Audit Bureau387

15.3.2. Audit Target Selection388

15.3.3 Tax Inspection389

15.3.4. Review and Decision of Tax Audit392

15.3.5. Enforcement of Tax Audit393

15.4 Tax Administrative Appeal394

15.5 Tax Litigation398

15.5.1. Juridical System398

15.5.2. Judicial Trial in First Instance398

15.5.3. Judicial Trial in Second Instance401

15.5.4. Petition for Review of Legally Effective Judgment402

15.5.5. Role of Procuratorate403

15.5.6. Enforcement of Judgment403

15.5.7. Compensation to Taxpayers404

APPENDIX405

Corporate Income Tax Law of the People's Republic of China (unofficial English translation)405

Corporate Income Tax Law of the People's Republic of China (Chinese version)414

The Implementation Rules for the Corporate Income Tax Law of the People's Republic　of China (unofficial English translation) 421

The Implementation Rules for the Corporate Income Tax Law of the People's Republic　of China (Chinese version)446

GLOSSARY463

KEY WORDS465

TABLE OF AUTHORITIES469

INDEX505