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Withholding Tax - a withholding tax of 10% is imposed on China-sourced
income derived by foreign corporations without permanent establishments in China (FIE
profits distributed to foreign investors are one of several exemptions to this rule).
* Customs Duties are levied on imported goods and materials, and applicable rates vary. “Encouraged” category FIEs may apply for specific exemptions applicable to equipment imported for their own use (see the Foreign Investment Guidance Catalog for a list of Encouraged activities).
* Value Added Tax (VAT) - sales of goods and some services within China are usually subject to VAT at rates of either 13% or 17%. Imported goods may also be subject to VAT. “Encouraged” category FIEs may apply for significant exemptions applicable to imported equipment for their own use (see the Foreign Investment Guidance Catalog for a list of Encouraged FIE activities).
* Consumption Tax - Basically a “sin” tax - certain goods that are defined as luxury items or unhealthy products are subject to consumption tax at rates ranging from 3% to 45%.
* Land Use Tax - local governments may impose land use tax at a rate determined
by the local government within guidelines set by the State Council.
* Land Appreciation Tax - upon disposal of real estate, the seller is usually liable for Land Appreciation Tax at graduated rates of between 30% and 60%.
* Business Tax is levied at rates of 3% - 5% for certain services including insurance, construction, and assignment of various intellectual property rights. Entertainment services are taxed at a rate of between 5% and 20%.
* Motor Vehicle Acquisition Tax - acquisition of various types of motor vehicles
(such as cars, motorcycles and certain trucks) are taxed at a 10% rate.
* Deed Tax - transfers, gifts and exchanges of land use rights and buildings are taxed
at rates of 3% - 5%.
National Tax Preferences for FIEs
Sample Local Tax Preferences for FIEs
Sample Industrial Park Tax Preferences for FIEs
Individual Income Tax
Article Source: http://www.article-matrix.com
David Carnes is licensed to practice law in California. He speaks and reads Mandarin Chinese and has several years experience working with Chinese law firms and Sino-American joint ventures. Check out his website, China Legal Bulletin.
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