Circular of the Ministry of Finance and the State Administration of Taxation on the Preferential Enterprise Income Tax Policies on the Additional Investment by Foreign-invested Enterprises

Circular of the Ministry of Finance and the State Administration of Taxation on the Preferential Enterprise Income Tax Policies on the Additional Investment by Foreign-invested Enterprises

Cai Shui [2002] No. 56

May 24, 2002

To the financial departments (bureaus) and national taxation bureaus of various provinces, autonomous regions, municipalities directly under the central government, and cities specifically designated in the state plan, as well as the local taxation bureaus of Guangdong Province, Hainan Province, and the city of Shenzhen, and the financial bureau of the Xinjiang Production and Construction Corps:

Recently, the question has been raised in many regions of the country whether foreign-invested enterprises who have expanded the scale of their investment and operation well beyond the scope in the original contract may, with regards to the income from these additional investments, individually calculate said income to take advantage of enterprise preferences policies allowing periodic reduction or even exemption from income tax, as described in

Article 8 of the Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises (hereafter referred to as the Tax Law) and originally stipulated in the Circular of the Ministry of Finance and the State Administration of Taxation Regarding Several Regulations Concerning the Issue of Income Tax Collection from Sino-Foreign Joint Venture Enterprises, Sino-Foreign Cooperative Production Enterprises, and Wholly Foreign-owned Enterprises (Cai Shui Wai Zi [86] No.
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