Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises

Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises


Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises

Order of the President [1991] No. 45

April 9, 1991

The Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises has been approved by the fourth session of the seventh National People's Congress on April 9, 1991. We hereby release it. It shall take effect as of July 1, 1991.
Chairman of the People's Republic of China Yang Shangkun

Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises
 
Article 1 Income tax shall be paid in accordance with the provisions of this Law by foreign-invested nterprises within the territory of the People's Republic of China on their income derived from production, business operations and other sources.
Income tax shall be paid in accordance with the provisions of this Law by foreign enterprises on their income derived from production, business operations and other sources within the territory of the People's Republic of China.
 
Article 2 "Enterprises with foreign investment" referred to in this Law means Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and foreign-capital enterprises that are established in China.
"Foreign enterprises" referred to in this Law mean foreign companies, enterprises and other economic organizations which have establishments or places in China and engage in production or business operations, or which, though without establishments or places in China, have income from sources within China.
 
Article 7 The income tax on enterprises with foreign investment established in special economic zones, foreign enterprises which have establishments or places in special economic zones engaged in production or business operations, and enterprises with foreign investment of a production nature established in economic and technological development zones shall be levied at the reduced rate of 15%.
The income tax on enterprises with foreign investment of a production nature established in coastal economic open zones, or in the old urban districts of cities where the special economic zones or the economic and technological development zones are located, shall be levied at the reduced rate of 24%.
The income tax on enterprises with foreign investment in coastal economic open zones, old urban districts of cities where the special economic zones or the economic and technological development zones are located, or other regions defined by the State Council within the scope of energy, communications, harbour, wharf or other projects encouraged by the State, may be levied at the reduced rate of 15%. The specific rules shall be regulated by the State Council.
 
Article 8 Any enterprise with foreign investment of a production nature scheduled to operate for a period of not less than 10 years shall, from the year in which it begins to make profits, be exempted from income tax in the first and second years and allowed a 50% reduction in the third to fifth years.
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