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 1st Jan 2022 up to 31st 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 1st Jan 2021 up to 31st dec 2022 and the grace period might be prolonged.
This income tax rate is surely one of the lowest in the world ever.