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China has extended tax incentive period for western region enterprises

6 Auguest 2011  

Currently in China, the rate of income tax applicable to normal enterprises is generally 25%. For the purpose of the western development, according to regulations promulgated by Chinese government in 2000 and 2001, if a foreign invested or a domestic invested enterprise is situated in western region of China and its business falls within the “encouraged” category of industries, then such encouraged industry enterprise may, during the period from 2001 to 2010, enjoy a tax incentive to pay enterprise income tax at a reduced rate of 15%.
Since this tax incentive had been expired at the end of 2010, on 27 July 2011, China's Ministry of Finance, General Administration of Customs and State Administration of Taxation jointly issued the Circular on Tax Policies for further Implementing Western Development Strategy (the "Circular") which has extended the period of the aforesaid tax incentive to the end of 2020.
According to the said Circular, the encouraged industry enterprise shall satisfy two conditions: (i) its principal business should be the one specified in the "Western Region Encouraged Industry Directory"; and (ii) the income of its principal business shall not be less than 70% of its total income.


Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.



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