(企业所得税实施细则)CIT Implication Rule

,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,U:Admin975SCI ADMIN ONLYGraphicsTemplatesNew TS templateTS Graphics-kit.ppt,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,U:Admin975SCI ADMIN ONLYGraphicsTemplatesNew TS templateTS Graphics-kit.ppt,*,Dezan Shira & Associates,CHINA TAX OVERVIEW & CIT UNIFICATION UPDATE, 200,7,Dezan Shira & Associates Ltd.,All rights reserved.,Index,Part One,China CIT Unification,Part Three,Implementation Rule of EIT & FEIT v.s. New Rule,Part One,China CIT Unification,Part One: China CIT Unification,5,Expenses Deduction,4,Grandfathering Rule,3,1,2,Residence Concept,Tax Rate,Tax Incentives,Residence Concept,Item,Definition,Tax Implication,China tax resident,Enterprises established in China,Tax on worldwide income,Foreign enterprises established outside China but its effective management is based in China,Non-China tax resident,Enterprises established outside China,Tax on China-sourced income,Example Help You to Understand the Definition,Conclusion of the Sample,Source of Income,Current Tax Law,New Law,Income derived from China,PE, pay tax,Pay tax as residence,Income derived from outside China,Exemption,Pay tax as residence,5,Expenses Deduction,4,Grandfathering Rule,3,1,2,Residence Concept,Tax Rate,Tax Incentives,Part One: China CIT Unification,Main ChangesTax Rate,Item,Tax rate,Applicable Enterprises,Standard Rate,25%,Most enterprises,Reduced Rate,20%,Small and thin-profit enterprises,Withholding Income Tax (“WHT”),20%,(Reduced to 10%),Incomes derived from profits, interest, rentals, royalties and other incomes from sources in China.,Illustration for small and thin profit enterprise,Tax rate,20%,Recognition criteria,For manufacturing enterprises,Total assets RMB 30 Million,Total employees 100 persons,Taxable income RMB 300,000,For non-manufacturing enterprises,Total assets RMB 10 Million,Total employees 80 persons,Taxable income RMB 300,000,Tax Rate for High-tech Enterprise,Tax rate,15%,Recognition Criteria,Enterprises which satisfies the high-tech recognition criteria are whose who have its own intellectual property and satisfies following criteria (no specific percentage):,Percentage of R&D expenses of total sales revenue.,Percentage of sales revenue generates from high-tech products sales and technological sales of total revenue.,Percentage of employees who have qualifications above diploma of total,Definition,High-tech Products High-tech Industry,“ Key High-tech Industries supported by Nations” which would be issued by State Council.,Tax Incentive for Non-resident enterprises,Tax incentive,10%,Non-resident enterprises generate income as Article 27 defines and corporate income tax rate is reduced to 10%.,Tax incentive,“Exempted”,Interest income derived from loans to China Government, banks within China and resident enterprises lent by international finance organizations;,Interest income derived within China on loans or bonds with preferential interest rate by foreign banks ;,Dividends on investment in high-tech industry for non-resident enterprise without establishment or places in China,5,Expenses Deduction,4,Grandfathering Rule,3,1,2,Residence Concept,Tax Rate,Tax Incentives,Part One: China CIT Unification,Possible forms of incentives,Possible eligible industrial sector,Tax holidays (3 years exemption, 3 years half since first sales recognizing year),Environment Protecting/Energy saving industry/Infrastructure projects,Complete exemption,Agriculture, forestry and fishery projects income will be 100% exempted from CIT,Reduced tax rate,Technical Transferring (Annual technology transferring income RMB5m, exempted from tax; The part exceeds RMB5m could enjoy 50% tax incentives.,Tax Incentives,Tax Incentive for High-tech Enterprise,Tax incentive,15%,Recognition Criteria,Enterprises which satisfies the high-tech recognition criteria are whose who have its own intellectual property and satisfies following criteria (no specific percentage):,Percentage of R&D expenses of total sales revenue.,Percentage of sales revenue generates from high-tech products sales and technological sales of total revenue.,Percentage of employees who have qualifications above diploma of total,Definition,High-tech Products High-tech Industry,“ Key High-tech Industries supported by Nations” which would be issued by State Council.,Tax Incentive for Infrastructure Projects,Tax incentive,“Three years exemption, three years half”,Recognition Criteria,For income generating from investment in public infrastructure projects investments, such as harbour, port, airport, railway, highway, electric power and water power;,The tax incentive is effective from the day on which the first operation sales is generated.,Tax Incentive for Environmental Protecting and Energy Saving Projects,Tax incentive,“Three years exemption, three years half”,Recognition Criteria,If the enterprises operate the projects relating to environment protection, energy and water saving;,e.g. sewage processing, public littering processing, marsh gas utilization, electricity generating by wind power, solar power, or tide power, seawater desalting etc,Tax incentive is effective from the day on which first operation sales is generated.,Tax Incentive for Agriculture, Forestry and Fishery,Tax incentive,“Exempted”,For Corn, leguminous plants, potatoes, oil plants, cotton, sugar etc;,Chinese Traditional medicine planting;,Animal husbandry such as pig, cows and sheep.,Service industry for agriculture, forestry, husbandry and fishery.,Tax incentive,“50%”,Agriculture products planting such as followers, tea etc.,farm culture and sea culture.,Tax Incentive for Technology Transfer,Tax incentive,“,Exempted”,and,“50%”,Recognition Criteria,For transfer income is within RMB 5M -,Exempted,For income part above RMB 5 M , - 50% tax incentive,Tax Incentive for Venture Capital,Tax incentive,70% of total investment in Small and Medium High-tech Enterprise is deductible for CIT purpose since the second investment year,Recognition Criteria,Equity investment in small and medium high-tech enterprises which are not listed;,investment more than 2 years,Criteria for Small and Medium High-tech Enterprises are Employee = 500, sales revenue less than RMB 200M, Total assets is less than RMB 200M.,Tax Incentive for R&D Expenses of new technology, products and know-how-Super Deduction,Tax incentive,Super,150% deduction if R,150% amortization if R,Recognition Criteria,R,Speedy Depreciation for Qualified Fixed Asset,Tax incentive,Depreciation period could be shorter than current rule, but could not be less than 60% of prescribed rate.,Recognition Criteria,Need to updated/upgrade frequently since high/new technology;,Always in the cauterization or vibration situation.,Expansion,“Encouraged” hi-tech enterprise will be eligible for a reduced income tax rate of 15%, irrespective of the location of such enterprises in China. Currently, only those hi-tech enterprises located in hi-tech industry development zone are covered by such preferential policies;,More tax incentives will be granted to start-up companies, and enterprises investing in environmental protection, energy and water savings.,Existing preferential tax policies for investments in infrastructure facilities will be retained;,Retaining,Existing preferential tax policies for agricultures, forestry, animal husbandry and fishery industries will be retained;,Replacement,Existing tax incentives available to those qualifying enterprises which employ laid-off or handicapped workers, (,After changing:,additional 100% salary of handicapped workers could be super deducted as expenses.),5,Expenses Deduction,4,Grandfathering Rule,3,1,2,Residence Concept,Tax Rate,Tax Incentives,Part One: China CIT Unification,Tax Rates,For the enterprises who enjoyed 15% tax rate, tax rate will be raised per “3%, 2%, 2%, 2% and 1%” in five years. (From 2008 to 2012);,For the enterprises who enjoyed 24% tax rate, tax rate will be reached to 25% directly in FY2008;,Enterprises that Already Enjoy Tax Incentives or Not Enjoyed,For production FIEs which have not fully utilized their five-year tax holiday (i.e. two-year exemption and three-year 50% reduction of the applicable tax rate), they will be allowed to continue to receive such a tax holiday during the five-year grand-fathering period.,For those FIEs which have not yet embarked on their tax holiday, the holiday will be deemed to have commenced from the effective date of the new law.,5,Expenses Deduction,4,Grandfathering Rule,3,1,2,Residence Concept,Tax Rate,Tax Incentives,Part One: China CIT Unification,Expenditure,Current Law,New Law,Local Enterprises,Foreign,Salary,RMB1600/Month,For Local Employees,No upper limit,No upper limit,Donations to Charities,Upper limit:,Normally-3% of taxable income,Financial institutions-1.5% of taxable income,No upper limit,More Reasonable Upper limit (12% of total accounting profit),Advertisements,According to different industries, 0%-25% of sales,No upper limit,Not exceed 15% of sales revenue of current period,Key Expense Deduction,Part Two,Implementation Rule of EIT & FEIT vs. New Rule,Categories of Tax Incentives,Application,Preferential Tax Treatments,High/New Tech Area,High/New Tech Enterprises,Enjoy a reduced tax rate of 15% but not 25%,Super R&D Deduction,Additional 50% deduction of qualified R&D expenses,Technology Transfer Income,Tax exemption/deduction applies to income arising from the transfer of technology by a Chinese tax resident enterprise: the first RMB5m of such income on a yearly basis is fully exempt, with the excess enjoying a 50% tax reduction.,Venture Capital Enterprises,70% of investment amount in those small-medium HNTEs with prescribed criteria on the industry, sales size, holding period, assets value etc., may be credited against the taxable income of of the venture capital enterprise with a carry forward period.,Other Encouraged Industries,Basic public infrastructure, environmental protection, energy/water conservation, production safety,3 year zero, 3 years half tax incentives since first sales year.,Agricultural, forestry, husbandry, fishery income,Tax exemption/deduction will apply.,Encouraged Assets Investment,Investment in equipment of environmental protection, energy/water conservation, production safety,10% of investment amount for this type of equipments is creditable against the tax payable with a 5 years carrying forward periods.,Small enterprises,Small or thin-profit enterprise,20% low rate,Tax Rate,Dividend,10%,Summary of Changes of New Rule,1,2,Expense Deductions,Tax Incentives,Implementation Rule of EIT & FEIT vs. New Rule,EIT,Financial institutions and insurance companies:,The maximum deduction permitted is 1.5% of enterprises annual taxable income.,For enterprises other than financial institutions and insurance companies,3% of enterprises annual taxable income,Since 1 July 2001, donations to educational institutions through state institutions and non-profit making social organizations are,fully deductible.,Donations made to designated non-profit making cultural organizations are deductible for amounts up to,10%,of the annual taxable profits.,Donations to other enterprises through China Culture Development Foundation are deductible for up to,3%,of the annual taxable profits.,Deduction - Donations,FEIT,Only those donations which are used within China fro public welfare or relief purpose can be deducted from taxable income.,All other donations are not deductible.,New Rule,12% of annual taxable profit is deductible;,EIT,Maximum monthly deductible RMB 800 (Since 2000);,Specific limits for deduction are determined by the relevant provincial autonomous and directly administered municipal peoples government;,Deduction - Salary,FEIT,No limitation.,New Rule,No limitation.,EIT,Social welfare would be fully deductible if they are medical insurance, pensions, job insurance, job injury insurance, maternity insurance, unemployment insurance, and housing fund.,Deduction - Welfare,FEIT,Same with EIT,New Rule,Social welfare- same as before.,Supplemental pension and medical insurance are deductible.,EIT,Not deductible,Deduction Commercial Insurance,FEIT,Not deductible,New Rule,Same as before.,Insurance for workers doing special type of work is deductible.,(Special Injury insurance for special industry),EIT,Interest for loans from financial organizations deductible,Interest for loans from non-financial organizations deductible for part lower than interest rate indicated by financial organizations.,Deduction Borrowing Costs,FEIT,Borrowings costs that lower than interest calculated with commercial loan rate.,New Rule,Same as EIT,Definition change from “financial organization” to “financial enterprise”.,EIT,Exchange gains and losses deductible in current accounting period,Deduction Exchange gains and losses,FEIT,Same as EIT.,New Rule,Same as before.,EIT,Employees welfare Maximum 14% of total salary deductible;,Labor union fees Maximum 2% of total salary deductible;,Employees education fees Maximum 1.5% of total salary deductible.,Deduction Employee welfare, labor union fees and education fees,FEIT,Same as EIT.,New Rule,Employees welfare same as before;,Labor union fees same as before.,Employees education fees ,2.5%,of total salary,EIT,Total sales revenue below RMB 15 M , less than 0.5% of net sales deductible;,The part above less than 0.3% of net sales deductible,Deduction Entertaining fees,FEIT,Sales revenue:,Total sales revenue below RMB 15 M , less than 0.5% of net sales deductible;,The part above less than 0.3% of net sales deductible,Service revenue:,Annual service revenue below RMB 5 M less than 1% of total sales revenues are deductible;,Excess part - less than 0.5% of excess sales revenue;,New Rule,60% of entertaining expenses actually occurred are deductible.,Maximum limitation is 0.5% of annual sales income.,EIT,Less than 2% of sales revenue is deductible, excess would be carried forward to next years;,Advertisement fees for foodstuff and wines are not deductible;,8% for some special industries as medicine, food, communication, software development etc.,Deduction Advertising fees,FEIT,No specific regulations. Refer to regulations for different industries.,New Rule,Maximum,15% of annual sales income deductible,expenses exceed 15% of annual sales income could be carried forward to next year.,EIT,Sponsor fees as advertisement fees -Less than 2% of sales revenue is deductible,Sponsor fees other than advertisement- Not deductible.,Deduction Sponsor expenses,FEIT,No identification.,New Rule,Same as before.,1,2,Deductions,Tax incentives,Implementation Rule of EIT & FEIT vs. New Rule,Tax incentive Environment protection and energy, water saving,EIT,FEIT,New Rule,N/A,N/A,“Three Years exemption, three years half” since the first sales year but not profit year.,Tax incentive Income from technology transfer,EIT,FEIT,New Rule,Annual net profit below RMB 300,000 Exempted,Excess part above RMB 300,000- liable to EIT,Exempted for income generated from technology importation contract.,For transfer income is within RMB 5M - Exempted,For income part above RMB 5 M , - 50% tax incentive,Tax incentive Income for non-resident enterprises,EIT,FEIT,New Rule,No regulations,Income generated within China for foreign enterprises which are outside China- 10%,Interest income derived from loans to China Government and China National Bank by International financial organization- Exempted,Interest income derived within China on loans or bonds with preferential interest rate by foreign banks ;,Profit generated from foreign invested enterprises for foreign investors- Exempted ( High-tech Enterprises with key support from Nations),Non-resident enterprises generate income as Article 27 defines and corporate income tax rate is reduced to,10%.,Interest income derived from loans to China Government let by foreign Government.- exempted;,Interest income derived within China on loans or bonds with preferential interest rate by foreign financial organizations-exempted;,Other income approved by State Council.,Tax incentive Criteria for small and thin enterprises,EIT,FEIT,New Rule,Annual taxable income is = RMB 30,000 18%,Annual taxable income is between RMB 30,000 and RMB 100,000, - 27%,N/A,20%,For manufacturing enterprises,Total assets RMB 30 Million,Total employees 100 persons,Taxable income RMB 300,000,For non-manufacturing enterprises,Total assets RMB 10 Million,Total employees 80 persons,Taxable income RMB 300,000,Tax incentive High-tech enterprises,EIT,FEIT,New rule,High-tech enterprise set up in high-tech zone approved by State Council 15%,Newly set-up high-tech enterprises two years exemption since set up,High-tech enterprises recognition,1) high-tech products or projects; 2) Research and development expenses should be above 5% of annual total sales; 3,）,Revenue from High-tech is more than 60% of total revenue.,FEIT rate is 15% and “Three years exemption and three years half”.,Criteria,High-tech enterprises established in high-tech development zone which are approved by State Council, or high-tech enterprises established in Beijing New Technology Development Zone,tax rate- 15%,Industry Orientation.,Criteria of specific percentages are not defined.,R&D expenses % of total revenue,Employees with diploma of total employees,Income generated from high-tech of total sales income.,Tax incentive Research and development fees,EIT,FEIT,New Rule,150% deducted as expenses,If R&D expenses in current year increased 10% than last year, additional 50% of actual R&D expenses could be deducted.,R&D expenses is not capitalized same as EIT.,If R&D expenses are capitalized as intangible assets- it should be amortized as 150% of cost of intangible assets.,Tax incentive Disable employees salary,EIT,FEIT,New Rule,N/A,N/A,200% deduction,Tax incentive Venture capital enterprise,EIT,FEIT,New rule,N/A,N/A,70% of total investment in Small and Medium High-tech Enterprise is deductible for CIT purpose since the second investment year .,Tax incentive Fixed Assets Definition,EIT,FEIT,New Rule,Non-production assets satisfies following criteria should be considered as FA as well:,Value RMB 2000,Usage period 2 years,Same with EIT.,No limitation on non-production assets.,Tax incentive Resource utilization,EIT,FEIT,New Rule,Income generated from productions using resources indicated in “Resource utilization list” which beyond the designed products- 5 years EIT exemption,Income generated from construction products production using large volume of coal gangue, steel slag, pulverized coal ash as main raw materials- 5 years EIT exemption,Enterprises for processing or utilizing disposed resource -1 year exemption,N/A,If enterprises produce with resources defined in “ Resource utilization tax inventive list” and products satisfies Nations relevant regulations 90% revenue are taxed,Tax incentive Environment protection equipments, energy and water saving, safe production,EIT,FEIT,New Rule,N/A,N/A,10% of equipment investment deductible,Q&A,