China

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

In the term of the Law of July 1-st, 1990, the levy of companies with foreign capital, whatever is their legal status, is subjected to a single rate of levy of 33% on their international incomes, This tax is divided as follows: 30% for the national part and 3% for the local part,
In areas with particular status, companies with foreign capital which export part of their production can benefit from fiscal benefits,

   
Tax rate on long-term capital gains Capital gains are levied at the rate of 33%,
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies Dividends are not subjected to any withholding tax,
   
Tax rate on branches There is no separate branch income tax .




Income tax

Fiscal year The fiscal year begins on January 1-st and ends on December 31 of the same year.
   
Income tax rate The rate is progressive from 5% to 45% and shared out on 9 brackets. It applies to the taxable monthly income:
0-500 RMB5%
501-2,000 RMB10%
2 001-5,000 RMB15%
5 001-20,000 RMB20%
20 001-40,000 RMB25%
40 001-60,000 RMB30%
80 001-80,000 RMB35%
80 001-100,000 RMB40%
Beyond 100,000 RMB45%
   
Tax deductions or other allowances
In China there are several types of deductions and reductions applying to taxpayers, For example, single people can deduct a fixed amount of their monthly salary accounting for 800 RMB, An additional amount of 3,200 RMB can be deducted from the monthly income of the foreigners taxed in China, for a total of 4,000 RMB,
The other deductions depend on the activity and on the salary of each,



VAT rates

Standard rates 17%
   
Reduced rates 3% or 6% for small-scale business
0% for exported goods.



Other important taxes


Name of tax
Rate
Consumption tax (CT): imposed on manufacturers and importers processing 11 categories of consumable/luxury goods (cigarettes, alcohol, petrol and motor vehicles).  
Progressive rate from 3 to 45%  
Business tax (BT): imposed on various service income (communication and transportation, construction, financial and insurance, posts and telecommunications, entertainment and servicing)  
3% to 20%  
Interests and royalties are subjected to a withholding tax,  
10% of their amount, giving birth to a Belgian tax credit at the rate of 20%,  


 

Accounting

Introduction
The Chinese financial accounting aims at:
- performing the requirements fixed for the national control
- understanding the financial situations of companies
- satisfying the necessities of the investors and the creditors
- satisfying the necessities of the directors and the employees
- strengthening internal administrative tasks.


Obligations and publications
Companies have to produce a balance sheet and a profit and loss account.
Moreover, the Ministry of Finance publishes an some important guidelines in the
"Accounting Standards for business Enterprises ".

Certification and auditing
" The Nation's People's Congress " is the highest authority, which promulgates laws and standards of the Chinese accounting.

Professionals and representative organizations
- The Ministry of Finance.



Useful links
For further information, please contact the State Administration of Taxation of China (in Chinese).

Last modified in 2006 - ongoing update
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