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Tax in China – Taxation in the PRC

(January 1st, 2014)

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 tax

Imposed 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 tax

Is 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 tax

Applies to income that is generated outside China

5%-45% (progressive)

Individual Income tax (IIT)

Levied on base salary, incentive compensation, labour service fee,
cash allowances (food allowance, transportation allowance, per diem),contributions to overseas insurance scheme, etc.

Tax on resource

Resources tax

Imposed 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 tax

Levied on gains from transfer and usage real rights of state – owned land and building on it such as real estate properties

30-60%

House Duty

Applied on owners of buildings

1.2% of building residual value or 12% of the rental

Tax On Transaction

Vehicle and Vessel Usage License Plate Tax

Levied on vehicle usage

25%,20%,15%,10%

Stamp Duty

Levied on “specified economic documents” (mainly contracts)

0.05% – 0.1% on amount of payment, fees or receipts

Deed tax

Applied 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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Ecovis Beijing

If you have further questions about IIT, VAT, any other tax, or in general about doing business in China, feel free to
tax in china contact us



Author:
Richard Hoffmann
richard.hoffmann@ecovis.com
Office website

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