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What is the time requirement for processing tax registration?

  • To hold relevant supporting documents and submit to competent tax authority in processing tax registration within 30 days from the date of approval for business license.

How can I process the tax registration regarding cessation of business?

  • Taxpayer who pays tax regularly in fixed amount shall place the "Cessation of Business Application" with competent tax authority, and after approval, receive the Notice of Approval of Cessation of Business . Other taxpayers need not process application , they shall only make zero filing.

How can I process resumption tax registration?

  • Complete the "Form of Receiving Resumption Document" and return the Notice of Approval of Cessation of Business , and resume business after approval.

Does enterprise setting up of a branch company require process ing tax registration? Can it be appl ied for by a plain invoice?

  • Yes,It need process tax registration. The company shall also bring all of its Industrial & Commercial Business License, parent company information, ID card of corporate representative of parent company and other documents to process at tax bureau. Enterprise s with a branch of independent accountability shall report its financial statements to local tax bureau and apply for plain invoice.

How can I identify the authenticity of invoice speedily?

  • To identify the following features:
    The invoice title and body shall be both in Block Letters, The words "Account s Copy" after normal completion shall show in purple color, Each copy shall be in a n 8-digit number, in Gothic typeface, The column of amount in words of the invoice shall.

Do gratuitous donation s of goods require special invoice?

  • Yes, Goods donated to general VAT payer will be issued VAT special invoice on demand of the donee.

Can this company , being a small-scale taxpayer, issue VAT special invoice?

  • Small-scale taxpayer can apply for VAT special invoice to competent tax authority.

Can the VAT special invoice issued by the tax bureau on behalf of small-scale taxpayer credit the Input VAT?

  • Yes, The taxation rate for special invoice issued by proxy shall be 4% or 6%, and general taxpayer will use this special invoice as credit proof.

Can Foreign Investment Enterprise, being small-scale taxpayer, purchase home equipment with VAT refund?

  • Yes. Home equipment purchased by non-VAT payer, small-scale taxpayer as well as Foreign Investment Enterprise set up in bonded area, in compliance with relevant requirements (GSF (1999) No. 171), can process refund of tax.

Can this company , being retail enterprise with annual turnover about RMB 2.1 million , refuse application for the qualification of general taxpayer?

  • No, According to requirements, enterprise with annual turnover above RMB 1.8 million will apply to tax bureau to become general taxpayer.

Can plain invoice credit Input VAT?

  • No, VAT special invoice recognized by the Tax Law can only credit Output VAT, but the amount of plain invoice can be included in purchase cost.

Can exported goods of small-scale taxpayer be entitled to refund of tax?

  • According to prevailing policies concerning tax rebates (exemptions) for exported goods, the goods exported by small-scale taxpayer on their own or on consignment shall be free of VAT, consumption tax but without refund.

How can I apply for the qualification of general taxpayer who can issue VAT special invoice?

  • Application for general taxpayer VAT special invoice shall fulfill the following conditions :
    Industrial enterprise with annual taxable sales value no less than RMB 1 million ;
    Commercial enterprise with annual taxable sales value no less than RMB 1.8 million ;
    Enterprise with a sound accounting and auditing system and purchased anti-counterfeiting tax control equipment .

What is the current rate of VAT rebate on exported goods?

  • Tax refund rate can be differentiated into six categories of 17%,13%,11%,8%,6%,and 5% according to different goods.

When shall enterprise empowered to manage import/export process export tax rebate (exemption) process confirmation?

  • Enterprise shall process export tax rebate (exemption) confirmation within 30 days after filing and registration with foreign trade & economic department.

What are the requirements for newly-opened productive enterprise to process "Exemption, Credit and Tax Rebate" for exported goods?

  • The refundable tax accrued within 12 months from the first export transaction of newly-opened productive enterprise shall be refunded per month but carried forward to next transaction to continue crediting the tax payable on domestic sales. 12 months later, enterprise being small-scale export-oriented enterprise , shall perform as required on small-scale export-oriented enterprise . E nterprise other than small-scale export-oriented enterprise will calculate process "Exemption, Credit and Tax Rebate" per month , except in the two following cases :
    Enterprise registered more than one year ago which create s new export business (other than small-scale enterprise), after verified by the municipal tax bureau to be competent of productive capacity and without violation of law, will process "Exemption, Credit and Tax Rebate" per month Newly-opened productive enterprise, whose domestic and export sales value amount to more than RMB 5 million and export sales account for more than 50%, will apply to provincial tax bureau for calculation of "Exemption, Credit and Tax Rebate" per month .

How can I process "Exemption, Credit and Tax Rebate"? What is the standard of small-scale export-oriented enterprise?

  • The refundable tax accrued during the year of small-scale export-oriented enterprise with a period of 12 months under review for tax refund, shall not be refunded per month but carried forward to next period to continue crediting the tax payable on domestic sales of goods, and processed refund of tax remaining after crediting at year end in one stroke.
    According to the State Administration of Taxation, the standard of small-scale export-oriented enterprise shall be determined by the State Administration of Taxation of each province in reference to proper reality of each on a basis of the enterprise's domestic and export sales value in aggregate of a taxable year, ranging from RMB 2 million to RMB 5 million, for example, the standard of small-scale export-oriented enterprise in Guangdong province is below RMB 3 million of domestic and export sales value in aggregate.

Can the goods exported by small-scale taxpayer on their own, or on consignment, process export rebates?

  • The goods exported by small-scale taxpayer on their own or on consignment , shall continue to perform tax-free policy, without crediting or rebating its Input Tax. The goods purchased by export-oriented enterprise from small-scale taxpayer for exportation are permitted tax rebates, if the rate of export rebates is 5%, the rate of rebates will be at 5%; if the rate of export rebates is above 5%, the applicable rate is 6% in any case.

In which link shall Consumption Tax be collected?

  • Consumption Tax shall be collected in single link, generally in the production, processing deal ing and importation link of taxable consumption goods, except for gold and silver jewelry, diamonds and diamond ornaments , which shall be taxed in retail link.

Which commodities are subject to Consumption Tax?

  • The following commodities Involve Consumption Tax :
    Cigarettes
    Alcoholic drinks and alcohol
    Cosmetics
    Golf and equipment, high-grade watches , yacht, wooden disposable chopsticks, hardwood flooring
    Precious jewelry and precious jade and stones
    Firecrackers and fireworks
    Product oils
    Motor vehicletires
    Motorcycles
    Saloon cars

Does enterprise which lends money to others and collects interest, need to pay Business Tax in banking and insurance industry?

  • Enterprise which lends money to others and collect s interest, incurs tax obligation in banking and insurance industry, so it shall pay Business Tax.

Shall the financial statements submitted in the annual declaration of Foreign Investment Enterprise Income Tax be audited by the Certified Public Accountant?

  • Enterprise shall report Income Tax return and financial statements to competent tax authority during the period as regulated by Tax Law, whether making profits or losses in taxable year. In reporting the financial statement, auditor's report by Chinese CPA should be attached.

How can enterprise subject to Income Tax at rate of half reduction prepay quarterly Income Tax?

  • Corporate Income Tax shall be prepaid quarter ly (prepaid within 15 days from the end of quarter), and calculated by year (settled within 5 months from year end), with refund for any overpayment or a supplemental payment for any deficiency. Foreign Investment Enterprise prepaying quarterly Corporate Income Tax shall use profits of this year to cover the losses incurred by the enterprise during the previous year at first, and prepay quarterly Corporate Income Tax payable on the profits after covering losses at applicable tax rate later. Therefore, enterprise entitled to half rate reduction of Corporate Income Tax shall prepay quarterly Income Tax at the half reduced tax rate .

Is there any time limit for reporting financial statements?

  • The reporting time limit: quarterly reporting within 15 days from the end of quarter, and annual reporting within 4 months from each year end.

Need Foreign Enterprise which charges consulting fee on enterprises in China pay Income Tax?

  • Yes, Foreign Enterprise without establishment in China shall pay Corporate Income Tax at 10% tax rebate.

Can the loss incurred by Foreign Investment Enterprise in one year be deducted from the profits in subsequent years?

  • In following two cases :
    Covering the loss incurred by only one company:
    The loss can be deducted from the profits of next taxable years consecutively up to 5 years. Loss of previous year shall be covered before quarterly ;
    Corporate Income Tax is prepaid from the remaining profits (if any) after covering the loss.
    Covering the loss incurred by more than one company :
    Enterprise with combined Income Tax reporting and paying will involve different tax rates applicable to more than one company which calculate their tax payable at their own tax rate respectively, therefore, the loss incurred by some company will be covered by the profits of other company at the same tax rate (if any), or covered by the profits of other company at similar tax rate.

What are the requirements for Foreign Ivestment Enterprise to settle the IncomeTax?

  • Enterprise shall report the annual statement of Corporate Income Tax to competent tax authority within 4 months after year end, and deduct the prepaid Income Tax from the yearly actual tax payable and verify the tax payable in supplement . The competent tax authority will carry out a general audit on the annual return and relevant information of the enterprise within 5 months from the year end, and profess the issues of the enterprise's annual Income Tax for refund for any overpayment or a supplemental payment for any deficiency.

Shall the travel allowance of employee on business trip be subject to individual income tax?

  • Yes, Travel allowance is generally treated as salary by the enterprise to the employee.

What effects will it have on taxation when Foreign Investment Enterprise has not fully paid the authorized capital within appointed time?

  • Foreign Investment Enterprise which ha s not fully paid the authorized capital, and has been disqualified as Foreign Investment Enterprise, will pay Corporate Income Tax as per the Tax Law as if the enterprise was a domestic investment enterprise.
    Foreign Investment Enterprise which has not fully paid the authorized capital, but has not been disqualified as Foreign Investment Enterprise, will pay corporate Profits Tax as per the Tax Law in the capacity of Foreign Investment Enterprise temporarily. If foreign investor contributes less than 25% of the authorized capital, there is no entitlement to Foreign Investment Enterprise Income Tax preference, and if more than 25%, there is entitlement to tax preference from this year.

Can the personal casualty insurance contributed by the company for employees be deducted before tax?

  • Only statutory insurance in China can be deducted before tax.

Can parent company of Foreign Investment Enterprise charge its branch in China for administration cost?

  • Yes, but the charge shall not be more than 2% of its gross profits, and it is necessary for the parent company to file application to the competent tax authority by the end of October each year.

How to process the VAT of "Processing and Assembly" Enterprise ?

  • "Processing and Assembly" Enterprise can process "Tax-free Certificate for Processing & Assembly" with the tax authority competent for export tax rebates, by virtue of imported goods declaration and registration handbook for processing & assembly reviewed and signed by customs, then the enterprise holding this Certificate can declare process exemption from VAT and Consumption Tax payable on its processing or processing deal of goods, with the tax authority in charge of taxation. After exportation of goods, enterprise shall process cancellation after verification with the tax authority in charge of export tax rebates by virtue of exported goods declaration for processing & assembly as well as the registration handbook for processing & assembly cancelled after verification by customs.

What taxes payable are involved in "Processing and Assembly"?

  • Taxes payable include:
    Foreign Investment Enterprise and Foreign Enterprise Income Tax, VAT, Consumption Tax, Stamp Duty, Real Estate Tax and vehicle and vessel license tax, Individual Income Tax (personally paid). The first three items of taxation are levied by national tax department, and the rest falls in the collection of local tax department.

Does Foreign Investment Enterprisen eed to pay "local educational surtax" ?

  • No.

Which investors are entitled to the preference of reinvestment tax refund?

  • Foreign investor of Foreign Investment Enterprise who shall reinvest its profits distributed from the enterprise directly into the same to increase the authorized capital or as capital contribution to open other Foreign Investment Enterprise, with operating period of at least 5 years, after approval of tax authority, shall be entitled to 40% of the income tax paid on its reinvestment.
    Foreign investor, who reinvests directly in China to set up or expand export-oriented enterprise or technologically advanced enterprise, shall be entitled to refund of the entire Corporate Profits Tax paid on its reinvestment.

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