STA Announces 4% Flat Taxable Income Rate for Cross-border E-commerce Enterprises in Comprehensive Pilot Zones Subject to EIT Taxation on a Deemed Basis
The State Taxation Administration ("STA") has recently issued the Announcement on Matters concerning Collection of Enterprise Income Tax on a Deemed Basis for Retail Export Enterprises in Cross-border E-commerce Comprehensive Pilot Zones (the "Announcement"), with effect from January 1, 2020.
The Announcement expounds on the matters related to the collection of enterprise income tax (EIT) on a deemed basis for cross-border e-commerce enterprises in the cross-border e-commerce comprehensive pilot zones (the "comprehensive pilot zones"), including the scope of enterprises subject to EIT taxation on a deemed basis, conditions, means, procedures, and the preferential policies, with a view to offering more convenient operational methods. The Announcement expressly states that cross-border e-commerce enterprises within the comprehensive pilot zones are subject to the pilot EIT taxation on a deemed basis, provided that three conditions, including one requiring that "e-commerce export declaration formalities for the exports are handled with the customs of the place where the comprehensive pilot zone is located", are met. Moreover, the Announcement notes that a cross-border e-commerce enterprise within the comprehensive pilot zone that is subject to the EIT taxation on a deemed basis, shall calculate its gross revenue accurately, and pay EIT based on the applicable taxable income rate which is a flat rate set at 4%. The Announcement also gives the respective definition of "comprehensive pilot zones" and "cross-border e-commerce enterprises".