Tax in China – Taxation in the PRC
By Richard Hoffmann, ECOVIS Beijing China
Understanding the tax system in China can be challenging. 25 common types of taxes are currently levied on either enterprises or individuals. Some are of common nature but several are only imposed on very specific goods or services.
The table “Tax in China” below gives an overview over the most important taxes that apply when investing in China:
Tax in China:
| Category Of Tax | Type Of Tax | Tax Rate |
Tax On Transaction | Value-added tax (VAT)Is levied on all goods sales (except for real estate) and the services of processing, repairing and replacing | 17% on most goods, sales and some services, 13% on daily necessary goods, 11% transportation, 6% on these Services: R&D, IT, cultural and creative, certification and consulting, international transportation, VAT exemption possible, 0% possible; (Rates for General Taxpayer) |
Consumption taxImposed on specific products such as tobacco, alcoholic drinks, jewellery, cosmetics, fireworks, gasoline, diesel oil,tires, motorcycles, automobiles and luxury articles | Tax rate varies from 1% for certain cars up to 50% for certain kinds of tobacco | |
Business taxIs applied on some services and the service of selling real estate properties | 3%-20% | |
Tax On Income | Corporate income tax (CIT/EIT)Levied on a company’s profits from production and business operations | 25%, 20%, 15%, 10% |
Withholding income taxApplies to income that is generated outside China | 5%-45% (progressive) | |
Individual Income tax (IIT)Levied on base salary, incentive compensation, labour service fee, | ||
Tax on resource | Resources taxImposed on the extraction of natural resources like natural gas, crude oil, coal, salt | Varying (Measured in x RMB per ton/qm) |
Tax on property & property transactions | Land appreciation taxLevied on gains from transfer and usage real rights of state – owned land and building on it such as real estate properties | 30-60% |
House DutyApplied on owners of buildings | 1.2% of building residual value or 12% of the rental | |
Tax On Transaction | Vehicle and Vessel Usage License Plate TaxLevied on vehicle usage | 25%,20%,15%,10% |
Stamp DutyLevied on “specified economic documents” (mainly contracts) | 0.05% – 0.1% on amount of payment, fees or receipts | |
Deed taxApplied on transfers of buildings or land usage rights | 3%-5% | |
Customs duties | Customs duties(Tariff) Imposed on imported and exported goods | Big divergence, taxes depending on CIF (cost, insurance, freight), also depending on nature of the good and country of origin. |
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Contact person
Richard Hoffmann
Lawyer in Heidelberg
Phone: +49 6221 9985 639
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