Shanghai Issues Trial Procedures for Consolidated CIT Payments by Headquarters

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Mar. 23 – Shanghai’s state and local tax bureaus have issued the “Trial Procedures on the Filing of the Allocation Proportion of Consolidated CIT Payments by Headquarters in Shanghai (huguoshuisuo [2010] No. 10)” (“Trial Procedures”) on March 10, 2012. The Trial Procedures apply to headquarters in Shanghai that operate trans-regionally and pay CIT on a consolidated basis. It provides for the materials that these headquarters should submit for the filing of branches’ allocation proportion of CIT.

The Trial Procedures have been issued based on the “Interim Measures for the Administration of the Collection of Consolidated Payment of Corporate Income Tax (CIT) in Trans-Regional Operations (guoshuifa [2008] No.28)” (“Interim Measures”) issued by the State Administration of Taxation on March 10, 2008. Continue reading…

China’s 2011 Tax Revenue from Non-resident Enterprises Hits Record High

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Non-resident enterprises should be careful about their financial strategies to avoid unexpected and unnecessary tax exposure in China

Mar. 13 – China’s State Administration of Taxation (SAT) announced that its tax revenue from non-resident enterprises (NREs) reached RMB102.6 billion (US$16.16 billion) in 2011, exceeding RMB100 billion for the first time and reporting a 31.8 percent increase from a year earlier. Although this amount only accounts for roughly 1.1 percent of China’s total tax revenue last year, the high growth rate underscores the government’s increasing attention to this particular group of taxpayers.

Among a variety of taxes collected from NREs, corporate income tax (CIT) plays a major role and takes up around 85 percent of the group’s total tax imposition. NREs’ total CIT contributions in 2011 reached RMB87.2 billion, seeing a rapid increase of 38.4 percent from 2010. Continue reading…

China Clarifies Favorable CIT Treatment to Infrastructure and “Green” Projects

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Feb. 10 – China’s “Corporate Income Tax (CIT) Law (PRC Chairman Decree No. 63)” and its implementation details (State Council Decree No. 512) – both effective on January 1, 2008 – have granted six-year-long tax incentives to projects on key public infrastructure development and environmental protection. Based on those laws, a recent government document has clarified the implementation of such incentives on eligible projects that have already been recognized before 2008.

According to CIT laws, for an enterprise that engages in eligible public infrastructure, environmental protection, energy saving and water conservation projects (“eligible projects”), the corporate income derived from such projects is exempt from CIT during the first three years (the first year shall be the year when the enterprise’s first revenue arises from the production and operation of the eligible projects), and is subject to a 50 percent CIT reduction during the fourth to sixth year. Continue reading…

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