中华人民共和国外商投资企业和外国企业所得税法(英文版)

中华人民共和国外商投资企业和外国企业所得税法(英文版)

中华人民共和国外商投资企业和外国企业所得税法（英文版）

INCOME TAX LAW OF THE PEOPLE'S REPUBLIC OF

CHINA FOR ENTERPRISESWITH FOREIGN INVESTMENT

AND FOREIGN ENTERPRISES

(Adopted at the Fourth Session of the Seventh National

People'sCongress on April 9, 1991, promulgated by Order No. 45 of the

President ofthe People's Republic of China on April 9, 1991 and effective

as of July1, 1991)

Important Notice:

In case of discrepancy, the original version in Chinese shall prevail.

Whole Document

INCOME TAX LAW OF THE PEOPLE'S REPUBLIC OF CHINA FOR

ENTERPRISES WITH

中华人民共和国外商投资企业和外国企业所得税法(英文版)

FOREIGN INVESTMENT AND FOREIGN ENTERPRISES

(Adopted at the Fourth Session of the Seventh National People's Congress on April 9, 1991, promulgated by Order No. 45 of the President of

the People's Republic of China on April 9, 1991 and effective as of July

1, 1991)

Article 1

Income tax shall be paid in accordance with the provisions of this Law by

enterprises with foreign investment within the territory of the People's Republic of China on their income derived from production, business

operations and other sources. Income tax shall be paid in accordance with

the provisions of this Law by foreign enterprises on their income derived

from production, business operations and other sources within the

territory of the People's Republic of China.

Article 2

"Enterprises with foreign investment" referred to in this Law

中华人民共和国外商投资企业和外国企业所得税法(英文版)

mean

Chinese-foreign equity joint ventures, Chinese-foreign contractual joint

ventures and foreign-capital enterprises that are established in China.

"Foreign enterprises" referred to in this Law mean foreign companies,

enterprises and other economic organizations which have establishments or

places in China and engage in production or business operations, and

which, though without establishments or places in China, have income from

sources within China.

Article 3

Any enterprise with foreign investment which establishes its head office

in China shall pay its income tax on its income derived from sources

inside and outside China. Any foreign enterprise shall pay its income tax

on its income derived from sources within China.

Article 4

中华人民共和国外商投资企业和外国企业所得税法(英文版)

The taxable income of an enterprise with foreign investment and an

establishment or a place set up in China to engage in production or

business operations by a foreign enterprise, shall be the amount remaining

from its gross income in a tax year after the costs, expenses and losses have been deducted.

Article 5

The income tax on enterprises with foreign investment and the income tax

which shall be paid by foreign enterprises on the income of their

establishments or places set up in China to engage in production or

business operations shall be computed on the taxable income at the rate of thirty percent, and local income tax shall be computed on the taxable

income at the rate of three percent.

Article 6

The State shall, in accordance with the industrial policies, guide

中华人民共和国外商投资企业和外国企业所得税法(英文版)

the

orientation of foreign investment and encourage the establishment of

enterprises with foreign investment which adopt advanced technology and

equipment and export all or greater part of their products.

Article 7

The income tax on enterprises with foreign investment established in

Special Economic Zones, foreign enterprises which have establishments or

places in Special Economic Zones engaged in production or business

operations, and on enterprises with foreign investment of a production

nature in Economic and Technological Development Zones, shall be levied at

the reduced rate of fifteen percent.

The income tax on enterprises with foreign investment of a production

nature established in coastal economic open zones or in the old urban

中华人民共和国外商投资企业和外国企业所得税法(英文版)

districts of cities where the Special Economic Zones or the Economic and

Technological Development Zones are located, shall be levied at the

reduced rate of twenty-four percent.

The income tax on enterprises with foreign investment in coastal economic

open zones, in the old urban districts of cities where the Special

Economic Zones or the Economic and Technological Development Zones are

located or in other regions defined by the State Council, within the scope of energy, communications, harbour, wharf or other projects encouraged by

the State, may be levied at the reduced rate of fifteen percent. The

specific measures shall be drawn up by the State Council.

Article 8

Any enterprise with foreign investment of a production nature scheduled to

operate for a period of not less than ten years shall, from the

中华人民共和国外商投资企业和外国企业所得税法(英文版)

year

beginning to make profit, be exempted from income tax in the first and

second years and allowed a fifty percent reduction in the third to fifth years. However, the exemption from or reduction of income tax on

enterprises with foreign investment engaged in the exploitation of

resources such as petroleum, natural gas, rare metals, and precious metals shall be regulated separately by the State Council. Enterprises with

foreign investment which have actually operated for a period of less than

ten years shall repay the amount of income tax exempted or reduced

already.

The relevant regulations, promulgated by the State Council before the

entry into force of this Law, which provide preferential treatment of

exemption from or reduction of income tax on enterprises engaged in

中华人民共和国外商投资企业和外国企业所得税法(英文版)

energy, communications, harbour, wharf and other major projects of a

production nature for a period longer than that specified in the preceding paragraph, or which provide preferential treatment of exemption from or

reduction of income tax on enterprises engaged in major projects of a non-

production nature, shall remain applicable after this Law enters into

force.

Any enterprise with foreign investment which is engaged in agriculture,

forestry or animal husbandry and any other enterprise with foreign

investment which is established in remote underdeveloped areas may, upon

approval by the competent department for tax affairs under the State

Council of an application filed by the enterprise, be allowed a fifteen to thirty percent reduction of the amount of income tax payable for a period

of another ten years following the expiration of the period for

中华人民共和国外商投资企业和外国企业所得税法(英文版)

tax

exemption or reduction as provided for in the preceding two paragraphs. After this Law enters into force, any modification to the provisions of

the preceding three paragraphs of this Article on the exemption from or

reduction of income tax on enterprises shall be submitted by the State

Council to the Standing Committee of the National People's Congress for

decision.

Article 9

The exemption from or reduction of local income tax on any enterprise with

foreign investment which operates in an industry or undertakes a project

encouraged by the State shall, in accordance with the actual situation, be at the discretion of the people's government of the relevant province,

autonomous region or municipality directly under the Central Government.

中华人民共和国外商投资企业和外国企业所得税法(英文版)

Article 10

Any foreign investor of an enterprise with foreign investment which

reinvests its share of profit obtained from the enterprise directly into that enterprise by increasing its registered capital, or uses the profit

as capital investment to establish other enterprises with foreign

investment to operate for a period of not less than five years shall, upon approval by the tax authorities of an application filed by the investor, be refunded forty percent of the income tax already paid on the reinvested amount. Where regulations of the State Council provide otherwise in

respect of preferential treatment, such provisions shall apply. If the

investor withdraws its reinvestment before the expiration of a period of

five years, it shall repay the refunded tax.

Article 11

Losses incurred in a tax year by any enterprise with foreign investment

and by an establishment or a place set up in China by a foreign enterprise to engage in production or business operations may be made up

中华人民共和国外商投资企业和外国企业所得税法(英文版)

by the

income of the following tax year. Should the income of the following tax

year be insufficient to make up for the said losses, the balance may be

made up by its income of the further subsequent year, and so on, over a

period not exceeding five years.

Article 12

Any enterprise with foreign investment shall be allowed, when filing a

consolidated income tax return, to deduct from the amount of tax payable

the foreign income tax already paid abroad in respect of the income

derived from sources outside China. The deductible amount shall, however,

not exceed the amount of income tax otherwise payable under this Law in

respect of the income derived from sources outside China.

Article 13

中华人民共和国外商投资企业和外国企业所得税法(英文版)

The payment or receipt of charges or fees in business transactions between

an enterprise with foreign investment or an establishment or a place set

up in China by a foreign enterprise to engage in production or business

operations, and its associated enterprises, shall be made in the same

manner as the payment or receipt of charges or fees in business

transactions between independent enterprises. Where the payment or receipt

of charges or fees is not made in the same manner as in business

transactions between independent enterprises and results in a reduction of the taxable income, the tax authorities shall have the right to make

reasonable adjustment.

Article 14

Where an enterprise with foreign investment or an establishment or a place

set up in China by a foreign enterprise to engage in

中华人民共和国外商投资企业和外国企业所得税法(英文版)

production or

business operations is established, moves to a new site, merges with

another enterprise, breaks up, winds up or makes a change in any of the

main entries of registration, it shall present the relevant documents to and go through tax registration or a change or cancellation in

registration with the local tax authorities after the relevant event is registered, or a change or cancellation in registration is made with the administrative agency for industry and commerce.

Article 15

Income tax on enterprises and local income tax shall be computed on an

annual basis and paid in advance in quarterly instalments. Such payments

shall be made within fifteen days from the end of each quarter and the

final settlement shall be made within five months from the end of each tax

year. Any excess payment shall be refunded and any deficiency shall be

中华人民共和国外商投资企业和外国企业所得税法(英文版)

repaid.

Article 16

Any enterprise with foreign investment and any establishment or place set

up in China by a foreign enterprise to engage in production or business

operations shall file its quarterly provisional income tax return in

respect of advance payments with the local tax authorities within the

period for each advance payment of tax, and it shall file an annual income tax return together with the final accounting statements within four

months from the end of the tax year.

Article 17

Any enterprise with foreign investment and any establishment or place set

up in China by a foreign enterprise to engage in production or business

operations shall report its financial and accounting systems to the local tax authorities for reference. All accounting records must be complete and accurate, with legitimate vouchers as the basis for entries.

中华人民共和国外商投资企业和外国企业所得税法(英文版)

If the financial and accounting bases adopted by an enterprise with

foreign investment and an establishment or a place set up in China by a

foreign enterprise to engage in production or business operations

contradict the relevant regulations on tax of the State Council, tax

payment shall be computed in accordance with the relevant regulations on

tax of the State Council.

Article 18

When any enterprise with foreign investment goes into liquidation, and if

the balance of its net assets or the balance of its remaining property

after deduction of the enterprise's undistributed profit, various funds and liquidation expenses exceeds the enterprise's paid-in capital, the

excess portion shall be liquidation income on which income tax shall be

中华人民共和国外商投资企业和外国企业所得税法(英文版)

paid in accordance with the provisions of this Law.

Article 19

Any foreign enterprise which has no establishment or place in China but

derives profit, interest, rental, royalty and other income from sources in China, or though it has an establishment or a place in China, the said

income is not effectively connected with such establishment or place,

shall pay an income tax of twenty percent on such income. For the payment

of income tax in accordance with the provisions of the preceding

paragraph, the income beneficiary shall be the taxpayer and the payer

shall be the withholding agent. The tax shall be withheld from the amount

of each payment by the payer. The withholding agent shall, within five

days, turn the amount of taxes withheld on each payment over to the State

Treasury and submit a withholding income tax return to the

中华人民共和国外商投资企业和外国企业所得税法(英文版)

local tax

authorities.

Income tax shall be exempted or reduced on the following income:

(1) the profit derived by a foreign investor from an enterprise with

foreign investment shall be exempted from income tax;

(2) income from interest on loans made to the Chinese government or

Chinese State banks by international financial organizations shall be

exempted from income tax;

(3) income from interest on loans made at a preferential interest rate to Chinese State banks by foreign banks shall be exempted from income tax; and

(4) income tax of the royalty received for the supply of technical know-

how in scientific research, exploitation of energy resources, development

of the communications industries, agricultural, forestry and animal

husbandry production, and the development of important technologies may,

中华人民共和国外商投资企业和外国企业所得税法(英文版)

upon approval by the competent department for tax affairs under the State

Council, be levied at the reduced rate of ten percent. Where the

technology supplied is advanced or the terms are preferential, exemption

from income tax may be allowed.

Apart from the aforesaid provisions of this Article, if preferential

treatment in respect of reduction of or exemption from income tax on

profit, interest, rental, royalty and other income is required, it shall be regulated by the State Council.

Article 20

The tax authorities shall have the right to inspect the financial,

accounting and tax affairs of enterprises with foreign investment and

establishments or places set up in China by foreign enterprises to engage

in production or business operations, and have the right to inspect

中华人民共和国外商投资企业和外国企业所得税法(英文版)

tax

withholding of the withholding agent and its payment of the withheld tax

into the State Treasury. The entities and the withholding agents being so inspected must report the facts and provide relevant information. They may

not refuse to report or conceal any facts.

When making an inspection, the tax officials shall produce their identity documents and be responsible for confidentiality.

Article 21

Income tax payable according to this Law shall be computed in terms of

Renminbi (RMB). Income in foreign currency shall be converted into

Renminbi according to the exchange rate quoted by the State exchange

control authorities for purposes of tax payment.

Article 22

If any taxpayer fails to pay tax within the prescribed time limit, or if the withholding agent fails to turn over the tax withheld within the

prescribed time limit, the tax authorities shall, in addition to setting a

中华人民共和国外商投资企业和外国企业所得税法(英文版)

new time limit for tax payment, impose a surcharge for overdue payment,

equal to 0.2 percent of the overdue tax for each day in arrears, starting from the first day the payment becomes overdue.

Article 23

The tax authorities shall set a new time limit for registration or

submission of documents and may impose a fine of five thousand yuan or

less on any taxpayer or withholding agent which fails to go through tax

registration or make a change or cancellation in registration with the tax authorities within the prescribed time limit, or fails to submit income

tax return, final accounting statements or withholding income tax return

to the tax authorities within the prescribed time limit, or fails to

report its financial and accounting systems to the tax authorities for

reference. Where the tax authorities have set a new time limit for

中华人民共和国外商投资企业和外国企业所得税法(英文版)

registration or submission of documents, they shall impose a fine of ten

thousand yuan or less on the taxpayer or withholding agent which again

fails to meet the time limit for going through registration or making a

change in registration with the tax authorities, or for submitting income tax return, final accounting statements or withholding income tax return

to the tax authorities. Where the circumstances are serious, the legal

representative and the person directly responsible shall be investigated

for criminal responsibility by applying mutatis mutandis the provisions of Article 121 of the Criminal Law.

Article 24

Where the withholding agent fails to fulfil its obligation to withhold tax as provided in this Law, and does not withhold or withholds an amount less

than that should have been withheld, the tax authorities shall set a time limit for the payment of the amount of tax that should have been

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