Circular of the Administration of Taxation of the Ministry of Finance on Several Provisions on Issues Relating to the Imposition of Income Tax on Chinese-Foreign Equity Joint Ventures, Chinese-Foreign Cooperative Joint Ventures and Wholly Foreign-Owned Enterprises

Circular of the Administration of Taxation of the Ministry of Finance on Several Provisions on Issues Relating to the Imposition of Income Tax on Chinese-Foreign Equity Joint Ventures, Chinese-Foreign Cooperative Joint Ventures and Wholly Foreign-Owned Enterprises
Circular of the Administration of Taxation of the Ministry of Finance on Several Provisions on Issues Relating to the Imposition of Income Tax on Chinese-Foreign Equity Joint Ventures, Chinese-Foreign Cooperative Joint Ventures and Wholly Foreign-Owned Enterprises

Cai Shui Wai Zi [1986] No. 102

April 21, 1986

Several provisions on issues relating to the imposition of income tax on Chinese-foreign equity joint ventures, Chinese-foreign cooperative joint ventures and wholly foreign-owned enterprises are hereby issue to you for study and implementation.

I. For "expenses incurred during the preparation period" (hereinafter after referred to as the "preparation expenses") by Chinese-foreign equity joint ventures, Chinese-foreign cooperative joint ventures and wholly foreign-owned enterprises, the issue of how to determine the scope of the preparation period and the preparation expenses and conduct amortization calculation. 
1. The term "preparation period" as used in Article 17 of the Details Rules for the Implementation of the Income Tax Law on Chinese-foreign Equity Joint Ventures and Article 22 of the Implementing Rules of the Foreign Enterprise Income Tax Law of the People's Republic of China means, in the case of Chinese-foreign equity joint ventures and Chinese-foreign cooperative joint ventures, the period between the date when relevant contracts are entered into by all parties and the commencement of their production and operation and, in the case of wholly foreign-owned enterprises, the period between the date when their establishment is approved by relevant authorities of China and the commencement of their production and operation.
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