Law of the People's Republic of China on Enterprise Income Tax (Amended in 2017)

Law of the People's Republic of China on Enterprise Income Tax (Amended in 2017)
Law of the People's Republic of China on Enterprise Income Tax (Amended in 2017) 

Order of the President No.64

February 24, 2017

(Adopted at the 5th Session of the 10th National People's Congress on March 16, 2007; and amended according to the Decision of the Standing Committee of the National People's Congress on Revising the Law of the People's Republic of China on Enterprise Income Tax at the 26th Meeting of the Standing Committee of the 12th National People's Congress of the People's Republic of China on February 24, 2017)

Chapter I General Provisions
Chapter II Taxable Income
Chapter III Payable Tax
Chapter IV Preferential Tax Treatment
Chapter V Tax Withheld at Source
Chapter VI Special Tax Payment Adjustment
Chapter VII Administration of Tax Collection
Chapter VIII Supplementary Provisions

Chapter I General Provisions

Article 1 Enterprise income tax payers shall be enterprises within the People's Republic of China and other organizations that obtain income within the People's Republic of China (hereinafter referred to as "Enterprises") and shall pay enterprise income tax in accordance with the provisions of this Law.
This Law shall not apply to wholly individually-owned enterprises and partnership enterprises.

Article 2 Enterprises are divided into resident enterprises and non-resident enterprises.
For the purposes of this Law, the term "resident enterprises" shall refer to Enterprises that are set up in China in accordance with the law, or that are set up in accordance with the law of the foreign country (region) whose actual administration institution is in China.
For the purposes of this Law, the term "non-resident enterprises" shall refer to Enterprises that are set up in accordance with the law of the foreign country (region) whose actual administration institution is outside China, but have set up institutions or establishments in China or, without institutions or establishments set up in China, have income originating from China.

Article 3 Resident enterprises shall pay enterprise income tax in relation to their income originating both within and outside China.
Non-resident enterprises that have set up institutions or establishments in China shall pay enterprise income tax in relation to income originating from China obtained by the set up institutions or establishments, and income occurring outside China but having an actual connection with the set-up institutions or establishments.
Non-resident enterprises that have not set up institutions or establishments in China, or have set up institutions or establishments but the income obtained by the said enterprises has no actual connection with the set-up institutions or establishments, shall pay enterprise income tax in relation to their income originating from China.

Article 4 The rate of enterprise income tax shall be 25%.
In respect of non-resident enterprises that have obtained the income stipulated in Paragraph 3 of Article 3 hereof, the applicable tax rate shall be 20%.

Chapter II Taxable Income

Article 5 The balance of an Enterprise's total income in each taxable year deducted by non-taxable income, tax-exempted income, various deductions and permitted offset of losses in previous year(s) shall be the taxable income.

Article 6 Income obtained by Enterprises from various sources in monetary and non-monetary terms shall be the total income, including:
1. income from sales of goods;
2. income from provisions of services;
3. income from transfer of property;
4. income from equity investment such as dividends and bonuses;
5. interest income;
6. rental income;
7. income from royalties;
8. income from donations; and
9. other income.

Article 7 The following income from the total income shall not be taxable:
1. governmental funding;
2. administrative fees and government funds collected and included under governmental fiscal management in accordance with the law; and
3. other non-taxable income prescribed by the State Council.

Article 8 Reasonable expenses that are actually incurred by an Enterprise and are related to the income obtained by the Enterprise, including costs, fees, tax payments, losses and other expenses may be deducted from taxable income.

Article 9 As regards the expenditures for public welfare donations incurred by an enterprise, when computing taxable income, the portion within 12% of the total annual profit may be deducted, and the portion in excess of 12% thereof may be carried forward to be deducted in the following three years.

Article 10 The following expenses shall not be deducted from taxable income:
1. income from equity investment paid to investors such as dividends and bonuses;
2. payment of enterprise income tax;
3. late tax payment fines;
4. penalties, fines, and losses from property confiscation;
5.
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