QINGDAO, Aug. 4 – The local Qingdao taxation bureau recently issued a notice regarding the management approach of corporate income tax for financial funds, effective September 1, 2010.

The notice, issued July 21, applies to enterprises which both obtain financial funds and pay corporate income tax in Qingdao. Financial funds are defined as capital obtained from the government and other relevant financial departments, including different types of financial assistance, subsidies, and other special funds. The tax rebates that companies acquire from the government due to exporting products are excluded.

All types of financial funds that enterprises obtain from the government, except for the purpose of national investment or other purposes which demand the return of the principal (primary capital), should be included in the total enterprise income for the year. The financial funds which are used for special purposes approved by the State Council can be granted non-taxable income classification.

Furthermore, enterprises should submit all approval documents, the purpose of financial funds, the amount of the financial funds, and the allocated time to the local tax authority within the latest fiscal quarter since obtaining the financial funds.

For more information or advice regarding taxes in Qingdao, please contact Dezan Shira & Associates at qingdao@dezshira.com.