Consumption taxes

Nature of the tax

Consumption tax

Tax rate

The taxpayers of Consumption Tax include all enterprises, units, household businesses and other individuals engaged in production or importation of taxable consumer goods within the territory of the People's Republic of China. The taxable consumer goods exported by the taxpayers are exempt from Consumption Tax, unless the taxable consumer goods are restricted by the State from exportation. Taxes vary from 0 to 50% (30% on cosmetics, 20 to 45% for tobacco, 5 to 25% for alcoholic drinks, 17% for the personal care products for skin and hair, etc.).

Reduced tax rate

Preferential rate of 4% or 6% for small companies.
Sale of certain products (running water, books, medicines, newspapers and magazines, certain agricultural products, chemical fertilizers, liquefied gas, coal for domestic use) are taxed at the preferential rate of 13%.

Other consumption taxes

There are no additional taxes on consumption in addition to the official consumption tax.

Corporate taxes

Tax rate

Tax rate for foreign companies

Resident companies are taxed on their world incomes and the nonresident companies on the Chinese incomes.

Capital gains taxation

Tax on capital gains (20% rate) for a Chinese company is added to the regular tax.
Tax on capital gains on the sale of real estate (20%) is calculated as sale price - purchase price.
When capital gain is above 50% of the purchase price, the income tax rate on capital gain ranges between 30% and 60%. (60% when the capital gain is more than 200%).

Main allowable deductions and tax credit

The following expenditure is deductible under certain conditions:
-  Deduction of losses (deductible over 5 years)
-  Consolidated financial statements
-  Bad debts up to a limit of 3% of the granted loans (Chinese foreign companies in the financial sector) . 
-  Financial expenditure for income generation (except shareholder loans as per limit legally defined in China). 
-  Transactions between the associated parties
-  The method of depreciation is linear; however, a foreign company can make a request to Chinese tax authorities for an accelerated rate of depreciation.

Other corporate taxes

- tax on transactions (turnover tax): Value Added Tax (17%, 13% for certain products), consumption tax (3 to 50%), commercial tax (3 to 20%).
- environmental tax on natural resources
- land taxes: urban property tax (1.2% of the original value or 12% on the rental value)
- taxes generally paid in advance on vehicles and ships
- 10% of the taxable consideration on the purchase and import of cars, motor bikes, trams, electrical buses, carriages and certain types of stamp duty on trucks
- Stamp duty: between 0.005% to 0.1%
- Contract tax, on the assignees or the assignees of the ownership of the right of use of the land or the real estate will be taxed from 3% to 5%

Individual taxes

Tax rate

Allowable deductions and tax credit

- credit for donations up to 30% of the income.
- income of personnel services (deduction of CNY 800 or 20%). 
- current expenditure for rental income, up to CNY 800 for each simple expenditure.
- relief for an individual who suffered a natural disaster.
- relief for handicapped person, widows/widowed person and orphans.

 

Special expatriate tax regime

For foreigners taxed in China, an additional amount of 3,200 RMB can be reduced from their monthly income, or a total of 4,000 RMB.

Double taxation treaties

Countries with whom a double taxation treaty have been signed

See the list of the treaties of non double taxation signed by China.

Withholding taxes

Withholding tax rates in China are 10% for dividends, 20% for interest and 20% for royalties.

Bilateral agreement

Sources of fiscal information

Tax Authorities

Fiscal Authority

Other domestic resources

Chinese government web portal