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1. Corporate Income Tax
Income Tax Rate for Foreign Investment Enterprises in Shanghai
Tax |
Tax Rate |
|
Areas other than the development zones |
|
Corporate income tax |
In a normal year |
Manufacturing enterprise 24% |
|
Tax exemption and reduction period |
First year and second year after making profit |
Income tax is exempted for enterprises with business period of over 10 years |
|
Third, fourth and fifth years after making profit |
24% * 0.5 = 12% |
|
Extension of tax exemption and reduction period |
Technologically advanced enterprise enjoy tax reduction by 50% for 3 more years |
|
24% * 0.5 = 12% |
|
Tax reduction in a specific year |
When the export value of an enterprise reaches 70% or more of its total output in a certain year the enterprise can enjoy 50% reduction of its tax in that said year |
|
24% * 0.5 = 12% |
|
Local income tax |
In a normal year |
3% |
|
First year and second year after making profit |
Tax exemption |
|
Tax reduction in a specific year |
When the export value of an export-oriented enterprise reaches 70% or more its total output in a certain year the tax can be exempted in that year |
|
When sending profits abroad |
Free of tax |
Note: The Corporate Income Tax rate of a non-manufacturing enterprise is 30%. The Local Income Tax rate of a non-manufacturing enterprise is 3%.
2. Value Added Tax
Enterprises or individuals who sell commodities, engage in repair and maintenance or import and export business in the territory of China are subject to value added tax in line with Chinese law. The standard rate for value added tax is 17%, but the rate for a few commodities such as grain, cooking oil, running water, forage, fertilizer, pesticide, and farming machinery is 13%.
3. Consumption Tax
Product, processing and importation of the following 11 commodities in the territory of China are subject to consumption tax: tobacco, alcoholic drinks or alcohol, cosmetics, skin and hair care products, jewellery, fireworks, gasoline, diesel, automobile tyre, motorcycle and motorcar. Consumption tax is calculated in two ways. One way is to calculate according to quantity (gasoline is RMB 0.20 per liter). The other is to set tax according to the price of commodities (the rate for motorcar with its engine cylinder under 2,200 ml is 8%)
4. Business Tax
Enterprises or individuals whose business are in the sectors of transportation, post and communication, finance and insurance, construction, art, sports, entertainment and services, or who transfer incorporeal properties, sell immovable in the territory of China are subject to business tax. Business tax rate is 3% or 5%. But the tax rate for entertainment sector is 10% or 15%.
5. Individual Income tax
The individual income, such as wages and salaries of foreigners working in China shall be taxed at the following progressive rates:
Income Tax Rate for Foreign Invested Enterprises in Shanghai
|
Grade |
Monthly Income taxable(RMB) |
Tax rate% |
|
1 |
The section less than 500 |
5 |
|
2 |
The section from 500 plus to 2,000 |
10 |
|
3 |
The section from 2,000 plus to 5,000 |
15 |
|
4 |
The section from 5,000 plus to 20,000 |
20 |
|
5 |
The section from 20,000 plus to 40,000 |
25 |
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6 |
The section from 40,000 plus to 60,000 |
30 |
|
7 |
The section from 60,000 plus to 80,000 |
35 |
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8 |
The section from 80,000 plus to 100,000 |
40 |
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9 |
The section exceeding 100,000 |
45 |
Note: The Monthly Income Taxable refers to the remaining sum of an individual’s monthly after RMB 1600 or an extra deductible sum is deducted as stipulated by Article 6 of the Law on Individual Income Tax. With regard to a foreigner, it refers to the remaining sum of his monthly income after RMB 3200 is deducted.
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