China Income Tax for corporations including WOFE (wholly owned foreign enterprise) – recent updates!

China Income Tax is the standard and basic corporate tax in China. Its standard rate is 25%.

But besides standard rate, many companies may be entitled for more preferential rate, among them:

- companies, which may be qualified as high-tech companies, are entitled for 15% tax rate;

- companies, which may be qualified as engaged in environment protection, are entitled for 15% tax rate;

- there’s also a long list of territories and industries, which are entitled for 15% tax rate, for example corporates from Nansha district, Hainan district and so on;

We would like to pay additional attention to tax burden for small-scaled companies. Most of our clients may be classified to this category.

For small-scaled companies with annual profit not exceeding 3 million RMB, and for companies which may be classified as thin profit business, the effective income tax rate from 1^st Jan 2022 up to 31^st dec 2024 is only 5%. And for companies with profit less than 1 million RMB the effective tax rate is only 2,5% for period start from 1^st Jan 2021 up to 31^st dec 2022 and the grace period might be prolonged.

This income tax rate is surely one of the lowest in the world ever.