Major Corporate Tax in China Mainland (not Hong Kong)

In the article we would like to regard two major corporate tax in Mainland China. This is Value Added Tax (VAT) and Profit tax.

1) Standard VAT rate for goods is 13%. Tax is to be paid on monthly base.

As the base for calculation is Government invoice value. 政府发票.

All these invoices are recorded in Tax Department. Tax Department may impose some restrictions on value or the number of invoices and is eligible for checking all invoices for the company.

The value of all invoices, issued by the company with money received, should be deducted the value of all invoices, settled by the company for the same period (cost of sales or cost of the product). Then 13% of the difference should be settled to the government through designated bank account for the previous month.

VAT is not applicable to many services, like transportation and other services.

VAT may be lowered for small companies with revenue less than 700 000 RMB and companies for the 1st operating year.

2) Profit Tax.

Government invoices also act as the base for the calculation of the profit tax. Calculation should be done quarterly in the beginning of the quarter for the previous one.

For the companies with net profit less than 3 millions, the profit tax is only 5%. For companies with profit over 3 millions, the profit tax is up to 25%.

Many cities and special regions may have tax policy differences. Also there are special rates for some types of goods, like innovative and eco-related goods.

Above rates are applicable to standard goods in Guangzhou region, where our company mostly operates.