Notice on Corporate Income Tax for Cross-Regional Construction Enterprises

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May 5 – The State Administration of Taxation recently issued a new tax circular Guoshuihan [2010] No. 156 regarding the management approach of corporate income tax for cross-regional construction enterprises effective January 1, 2010.

Guoshuihan [2010] No. 156, issued on April 19, stipulates that construction enterprises with headquarters and regional operation units should follow Guoshuifa [2008] No. 28 and use a unified approach to calculate corporate income tax.

For second level project departments below construction enterprises, corporate income tax shall be levied based on business income, employee salaries and asset value.

Branch offices under the direct management of the construction headquarters will be required to prepay corporate income tax, which is 0.2 percent of the actual business income, on a monthly or quarterly basis.

Corporate income tax for the head office of construction enterprises will be calculated deducting the amount already paid by its branch offices. Furthermore, the head office is required to prepare its annual corporate income tax report that includes corporate income tax prepayment and final settlement for local tax authorities.

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