Acadia can help you meet your Chinese tax obligations and advise on ad-hoc transactions that could have tax implications. We also suggest more efficient ways to plan local operations and corporate structures.
Schedule a Consultation to discuss our China tax services.
The following is an overview of the major tax categories, taxpayer classifications, corresponding descriptions and respective taxation rates applicable to resident and non- resident entities/individual in China:
- Corporate income tax (“CIT”) the standard tax rate is 25%, but that rate could be reduced to 15% for qualified enterprises which are engaged in industries encouraged by the China government (e.g., New/high Tech Enterprises and certain integrated circuits production enterprises). Tax holidays are also offered to enterprises engaged in encouraged industries. Other CIT incentives are also available for tax resident enterprises in China;
- Withholding income tax on payments to non-residents – a concessionary rate of 10% is currently applicable to interest, rental, royalty, and other passive income;
- Individual income tax (“IIT”) – progressive rates range from 3% to 45%;
- Value-added tax – applies to the sale of goods, except real estate properties, and the provision of labor services in relation to the processing of goods and repair and replacement services within China. The standard tax rate is 17% with certain necessities taxed at 13%;
- Consumption tax – applies to 14 categories of consumable goods, including tobacco, alcoholic drinks, cosmetics, jewelry, fireworks, gasoline, diesel oil, tires, motorcycles, automobiles, golf equipment, yacht, luxury watch, disposable chopsticks, and wooden floorboards. The tax is computed based on sales price and/or sales volume;
- Business tax – applies to the provision of services (excluding processing services and repair and replacement services), the transfer of intangible properties and the sale of real estate properties in China. Tax rates range from 3% to 20%;
- Monthly and quarterly Tax Compliance and Reporting Obligations
- Updates on New Changes in Legislation and Policy
- Communication and Negotiation with the Relevant Tax Authorities
International Tax and Cross-Border Transactions
- Legal Entity Holding Structure Planning
- Profit Repatriation Scheme
- Application of Double Taxation Agreements
Indirect Tax (VAT, GST etc.)
- Tax Implications on Transactions
- Guidance with Issuing and Receiving Receipts
- Application for Indirect Tax (e.g. VAT) Exemptions, Zero Rating for Exported Services
- Advisory on Customs, Tariffs, and Applicability of Free Trade Agreements
Indirect Tax (VAT, GST etc.)Transfer Pricing
- Review of Related Party Contracts/Agreements
- Performance of Benchmark Studies
- Preparation of Transfer Pricing Documentation
Tax equalization is a compensation strategy used to neutralize the impact of a global assignment on a mobile employee’s personal tax liability. If the tax in the overseas country is greater than the tax liability in the home country, the employer reimburses the excess. If the tax in the overseas country is less than the home country hypothetical tax liability, the employer retains the benefit.
Through our tax advisory services, we are able to run simulation analyses for tax liabilities crossing multiple jurisdictions in order to calculate hypothetical tax exposure in the home country. The analysis can be delivered in the form of a PDF report, which can then be used for both your own reference and employee mobility discussions.