The foreign-funded enterprises in service sector with investment of more than US $ 5 million and scheduled to operate for a period of 10 years or more can apply for tax exemption for the first profit-making year and a 50% reduction for the following two years.

Losses incurred by the foreign-funded enterprises in a tax year may be made up with a corresponding amount drawn from the next year's incomes. Should the incomes in the subse- quent tax year be insufficient to make up for the said losses, the balance may be made up with further deductions from their incomes year by year but within a period of not exceeding five years.

The Income Tax on Enterprises shall be collected on an annual basis and paid in advance in quarterly installments. The enterprises shall file their income tax returns in respect of advance payments within 15 days after the end of each quarter and file the annual income tax returns, together with the statements of final accounts within 4 months after the end of the tax year. The final settlement shall be made within 5 months after the end of each tax year. 

All the dividends, interest, rentals, royalties and other incomes arising from the SEZ for businessmen with no establishments in China can enjoy a reduced tax rate of 10% except the tax-free portion prescribed by laws.

2. Value-Added Tax

All the units and individuals with sales of goods or services of processing, repair and re- placement or import of goods shall be the tax payers of the Value-Added Tax (hereinafter called tax payers).

A. The tax rate is 17% for sales or import of goods by tax payers except those prescribed in B and C.

B. The tax rate is 13% for sales or import of the following goods by tax payers.

a. grain and edible vegetable oils;

b. tap water. heating, air conditioning. hot water, coal gas, liquified petroleum gas, natural gas, marsh gas and coal products for civil use;

c. books, newspapers and magazines;

d. feeds, fertilizers and pesticides;

e. other goods prescribed by the State Council.

C. Export goods, except those specially prescribed by the State Council, are exempted from the Value-Added Tax and Consumption Tax.

3. Consumption Tax

All the units and individuals engaged in production, consigned processing and import of the prescribed consumer goods in the People's Republic of China shall be the tax payers of the consumption tax  

4. Business Tax

All the units and individuals with taxable service or intangible asset transfer of property sales shall be the tax payers of Business Tax

5. Individual Income Tax

Schedule of Individual Income Tax Rates

Range of Taxable Income (yuan/month)	Tax Rate (%)
below 800	5
800 - 2,000	10
2,000-5,000	15
5,000-20,000	20
20,000-40,000	25
40,000-60,000	30
60,000-80,000	35
80,000-100,000	40
above 100,000	45

The amount of taxable income shall be computed as follows:

For incomes from wages and salaries, a monthly deduction of 800 yuan (an additional 3,200 yuan deduction for foreigners employed by foreign-funded enterprises or foreign enterprises set up in China, and an additional 300 yuan deduction for Chinese employees working at enterprises or institutions in Xiamen) shall be allowed for expenses and that part in excess of 800 yuan shall be taxed. For incomes from remuneration for personal service, contributions, royalties and lease of properties, a deduction of 800 yuan shall be allowed for expenses, if the amount received in a single payment is not exceeding 4,000 yuan; otherwise a deduction of 20% shall be allowed for expenses, and the remaining amount shall then be taxed. For incomes from transfer of properties, the original value of the property and some reasonable amount of expenses shall be deducted and the remaining amount shall then be taxed. Incomes from interests, dividends, bonus, occasional and other incomes shall be taxed on the amount received in each payment. 

6. The Vehicle and Vessel Usage License Plate Tax

 The tax is collected on the fixed amount on numbers of motor vehicles owned by the enterprises. The annual tax payment ranges from 160 to 320 yuan for each passenger vehicle and 56 yuan per ton for each truck.

Tonnage dues shall be charged by Customs on the motor vessels owned by Sino-foreign joint ventures with the exemption of license plate tax.

The tax shall be paid on a biannual basis and the tax returns be filed within the first month of the each half year.

 

7. The Urban Real Estate Tax

The tax shall be paid on a biannual basis at an annual rate of 1. 2 % on the net depreciated value of the houses and buildings owned by the enterprises.  

8. Customs Duties

 Customs duties are collected on the basis of the prices of the import and export goods.

Customs duties are exempted for the invested equipment, building materials imported for the production and operation of the foreign-funded enterprises and the raw and processed materials, primary parts, spare and component parts and packing materials, etc. imported for the actual consumption of the production of export products.

Export products of the foreign-funded enterprises are exempted from export duties, except those restricted by the State.

 Business Tax Schedule of Taxable Items and Tax Rates

Taxable Items     Tax Range     Tax Rates    I. Communication & Transportation     Land, waterway, air, pipeline transportation, potage and stevedoring transporation     3%    II. Construction     construction, installation, repair, and other engineering operations     3%    III. Banking & Insurance     ...     5%    IV. Posts and Telecommunications     ...     3%    V. Culture and Sports     ...     3%    VI. Entertainment     Billiard rooms and game houses, singing bars , dancing halls, Kareoke lounges, music tea houses, golf courses, bowling alleys     5%    VII. Service     Agency, hotels, catering, tourism, warehousing, leasing, advertising and other service sectors     5%    VIII. Transfer intangible assets     transfer of land use rights, franchise, non-patent rights, trade marks, and copyrights     5%    IX. Property Sales    buildings and other attached objects     5%