In this page:
Accounting Rules |
Tax Rates |
Intellectual Property |
Legal Framework |
- Tax Year
The financial year begins on January 1st and finishes on December 31st of the same year.
- Accounting Standards
The accountancy standards for companies promulgated by the Ministry of Finances (MOF) of 30 November 1992 and which came into effect on July 1, 1993. China promulgated its first complete standards specific to accountancy in 1997 and the MOF promulgated 13 standards more specific to accountancy since then. For more information, consult Chinaorbit.
- Accounting Regulation Bodies
Ministry of Finance (in Chinese)
- Accounting Reports
Audit report normally contains a paragraph of definition of the 'task' or `scope' and a paragraph of opinion. The paragraph of opinion aims at establishing if the accounts were prepared according to the appropriate rules and regulations. All the reservations in opinion must be elaborated above. Statements of financial accounts or reports should comprise a Balance Sheet, profit and loss accounts, a report of gross margin of self-financing, notes on the accounts and an account for appropriation of profits and losses. For more information consult the website of the China Accounting Standards Committee operating under the Ministry of Finance.
- Publication Requirements
- Professional Accountancy Bodies
CICPA , Website of the Chinese institute of chartered accountants (in English)
- Certification and Auditing
Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. You can contact the National Audit Office of China (CNAO).
- Accounting News
China Accounting News (EIN) (en anglais)
- Nature of the Tax
- Tax Rate
17%. 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.
- Reduced Tax Rate
Preferential rate of 3% 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%. Telecommunications service providers (both entities and individuals) are subject to VAT at the following rates: 11% (basic services) and 6% (value added services).
Some services are subject to a zero rate:
- International transport services, including the cross-border and overseas transport of passengers and cargo;
- R&D services provided for overseas entities; and
- Design services provided for overseas entities.
- Other Consumption Taxes
There are no additional taxes on consumption in addition to the official consumption tax.
Learn more about Service Providers in China on Globaltrade.net, the Directory for International Trade Service Providers.
- Company Tax
- 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 Credits
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 56%), 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%
- Education Tax (3%)
- Urban Construction and Maintenance Tax. The rates are 1% for low populated areas, 5% in country areas and 7% in big cities.
- Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
Country Comparison For Corporate Taxation
||East Asia & Pacific
|Number of Payments of Taxes per Year
|Time Taken For Administrative Formalities (Hours)
|Total Share of Taxes (% of Profit)
- Last Available Data.
|Individual tax rate
|RMB 0 - 1,500
|RMB 1,501 - 4,500
|RMB 4,501 - 9,000
|RMB 9,001 - 35,000
|RMB 35,001 - 55,000
|RMB 55,001 - 80,000
|RMB 80,001 or above
- Allowable Deductions and Tax Credits
- 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.
Learn more about Taxes and Accounting in China on Globaltrade.net, the Directory for International Trade Service Providers.
- Independence of Justice
Judiciary is not independent in China. The government controls the judiciary. The CCP directs verdicts and sentences, particularly in politically sensitive cases. China has not accepted the obligatory jurisdiction of the International Court of Justice (CIJ).
- Equal Treatment of Nationals and Foreigners
The judiciary does not guarantee an impartial trial to a foreign national. A high degree of corruption exists in the country, especially corruption within the CCP is rampant.
- The Language of Justice
- Recourse to an Interpreter
- Sources of the Law and Legal Similarities
The legal system is based on the Confucian philosophy of the social order by moral education. After the 1911 revolution, the Republic of China mainly adopted a legal code of Western type inspired by the German law.
The establishment of the People's Republic of China in 1949 brought a Soviet system influenced by socialism. There does not exist a tradition of constructive law in China and the first civil code dates from the beginning of the year 1980 and is written in a rather incomplete way as compared to the Western laws, which till today leaves an important place for arbitrary judgments. The law is subject currently to a progressive reform encouraged by external and internal pressures.. The constitution in force currently was promulgated in December 1982.
- Checking National Laws Online
China Legislative Network system
Learn more about Lawyers and Legal in China on Globaltrade.net, the Directory for International Trade Service Providers.
- General Information
Kwintessential Cross Culture solution
- Opening Hours and Days
Banks: Monday to Friday, from 8.30 to 17.00, from 8.00 to 13.00 on Saturday.
|New lunar year
|Qing Ming Festival
|Dragon Boat Festival
||October 1, 2
Periods When Companies Usually Close
||from May 1-7.
||One week off.
© Export Entreprises SA, All Rights Reserved.
Last Updates: January 2015