2. What are the corporate income tax rates under the New Law?

There are three different tax rates under the New Law:

• 25% - standard CIT rate;
• 20% - applicable to small-scale and thin-profit enterprises;
• 15% - applicable to “encouraged” high-tech enterprises.

新税法规定了哪些新税率？

新税法规定了以下三种不同的税率：

• 25% 为统一的所得税税率；
• 20% 适用于符合条件的小型微利企业；
• 15% 适用于国家需要重点扶持的高新技术企业。

3. How is a “tax resident enterprise” distinguished from a “non-tax resident enterprise”? What are their tax liabilities respectively?

The New Law introduces the concepts of “tax resident enterprise” and “non-tax resident enterprise” to differentiate taxpayers:

如何区分居民企业和非居民企业？他们有哪些相应的纳税义务？

新税法引入了“居民企业”和“非居民企业”的概念，对纳税人加以区分:

The New Law stipulates two categories of non-taxable income including:

Tax-free Income:

• Financial appropriation;
• Administrative charges;
• Governmental funds.

Tax-exempted Income:

• Interest from State bonds;
• Dividends derived from equity investments between two resident enterprises if relevant conditions are met;
• Dividends derived from a resident enterprise invested by a non-resident enterprise with an establishment or a place in China where such an income is effectively connected with this establishment or place; and
• Revenue generated from a non-profit organisation.

新税法中规定了哪些不征税 / 免税收入？

新税法中规定了以下两类不征税 / 免税收入：

不征税收入：

• 财政拨款；
• 依法收取并纳入财政管理的行政事业性收费；
• 政府性基金。

免税收入：

• 国债利息收入；
• 符合条件的居民企业之间的股息、红利等权益性投资收益；
• 在中国境内设立机构、场所的非居民企业从居民企业取得与该机构、场所有实际联系的股息、红利等权益性投资收益；
• 符合条件的非营利公益组织的收入。

5. Will the five-year tax holiday continue to apply? How will the transition period be applied?

The New Law revokes the existing five-year tax holiday for manufacturing foreign investment enterprises (“FIEs”) and allows for a five-year transition period. The transition arrangement is as follows:

• Manufacturing FIEs which have not fully utilised the five-year tax holiday (i.e. two-year exemption and subsequent three-year 50 ％ reduction of the applicable tax rate) can continue to enjoy the remaining tax holiday during the five-year transition period, e.g.

• Y2007: First profit-making year and the first CIT exemption year
• Y2008: Second CIT exemption year
• Y2009: First 50% CIT reduction year (with applicable new CIT rate applied)
• Y2010: Second 50% CIT reduction year
• Y2011: Third 50% CIT reduction year
• Y2012: The full CIT rate will apply
• Manufacturing FIEs which have not started their tax holidays under the old law will have their tax holidays start from the effective date of the New Law, e.g.

“两免三减半”是否继续适用？过渡期如何适用？

新税法取消了生产性外商投资企业享受的五年定期减免税优惠（即“两免三减半”），但允许在五年内过渡。 过渡期按以下方法适用：

• 尚未享受完“两免三减半”的生产性外商投资企业可以在新税法实行后的五年过渡期内继续享受到期满为止，例如：

• 2007 年 : 第一个获利年度和第一个免税年度
• 2008 年 : 第二个免税年度
• 2009 年 : 第一个减半征税年度（适用新税法税率）
• 2010 年 : 第二个减半征税年度
• 2011 年 : 第三个减半征税年度
• 2012 年 : 全额征税年度
• 那些尚未开始享受“两免三减半”的生产性外商投资企业，他们的优惠期限将从新税法实行年度起计算，例如：

6. How will the reduced tax rates be moved up to reach the applicable CIT rate under the New Law?

For FIEs currently enjoying a reduced CIT rate, e.g. 15%, the New Law does not specify how the 15% tax rate will be increased to the standard rate of 25% during the five-year transition period. It has been speculated that the 15% tax rate may be increased by 2% per year over the five-year transition period to reach 25%.

低税率优惠如何逐步过渡？

原享受低税率优惠（如 15% 的适用税率）的外商投资企业可以在新税法实行后五年内逐步过渡到统一的 25 ％的企业所得税税率。新税法没有详细说明 15% 的优惠税率将如何过渡到 25% 的标准税率，可能会是在五年的过渡期内，以每年递增 2% 的方式逐步过渡。

7. What tax incentives have been revoked under the New Law?

Some CIT preferential policies currently exclusively available to FIEs will be revoked, including:

• Five-year tax holiday for manufacturing FIEs;
• Extension of the tax holiday available to export-oriented FIEs;
• Reduced 15% / 24% CIT rate applicable to FIEs in special zones;
• CIT refund on reinvestment;
• 50% CIT reduction for additional three years after the tax holiday for FIEs qualified as “technologically-advanced enterprises”;
• CIT exemption for after-tax profit repatriation by foreign investors.

新税法取消了哪些税收优惠？

现行法规中很多针对外商投资企业的税收优惠已经被取消，包括：

• 生产性外商投资企业的“两免三减半”优惠；
• 外商投资出口企业的“两免三减半”后继续适用减半期；
• 特殊区域内外商投资企业享受的 15% 和 24% 的优惠税率；
• 再投资退税；
• 高新技术企业“两免三减半”后增加三年减半征税；
• 外国投资者税后利润汇出免税。

8. What industries / projects will enjoy tax preferential policies under the New Law?

The main tax preferential polices under the New Law include:

• “Encouraged” high-tech enterprises are eligible for a reduced 15% CIT regardless of location in China;
• CIT exemption / reduction remains for specific technology transfer and investment in infrastructure, agriculture, forestry, animal husbandry and fishery industries;
• “Super deduction” is allowed for R&D expenses and salary expenses for employment of handicapped workers;
• CIT credit is granted to specific venture capital enterprises and investments in environmental protection, energy, water conservation and specific safety equipment.

新税法下哪些行业 或项目可享税收优惠 ？

新税法对下列行业或项目给予税收优惠：

• 对鼓励类高新技术企业减按 15% 的税率征收企业所得税；
• 对符合条件的技术转让和对公共基础设施项目、农、林、牧、渔业产业的投资减征 / 免征企业所得税；
• 企业研发活动经费以及安置残疾人员的工资费用可以在计算应纳税所得额时加计扣除；
• 对创业投资企业和对环境保护、节能节水、安全生产项目的投资实行税额抵免。

9. What documentation is required for related enterprise transactions under the New Law?

The New Law focuses closely on related enterprise transfer pricing issues. It emphasises the following documentation requirements:

• An enterprise must report the details of related enterprise transactions together with its annual tax filing;
• An enterprise under tax audit with respect to transfer pricing must provide relevant documents as required, whether from the enterprise or its related parties. Otherwise, the tax authority has the right to determine the enterprise’s taxable income;
• The advance pricing agreement (“APA”) can be negotiated with the tax authority. The enterprise will need to provide its pricing principles and computation methods in its business transactions with related enterprises.

新税法对提供关联企业交易相关资料有何要求？

新税法对关联公司的转让定价问题给与特别关注，并强调了以下对提供相关资料的要求：

• 企业报送年度企业所得税纳税申报表时，应当详细报告与其关联方之间的业务往来；
• 税务机关在进行关联业务调查时，企业及其关联方，以及与关联业务调查有关的其他企业，应当按照规定提供相关资料，否则，税务机关有权依法核定其应纳税所得额;
• 企业可以向税务机关提出与其关联方之间业务往来的定价原则和计算方法，经协商与税务机关达成预约定价协议。

10. What anti-tax-avoidance measures are adopted under the New Law?

The New Law contains various anti-tax-avoidance provisions, which includes the following:

• Tax authorities are empowered to make tax adjustments and impose interest surcharges if a transaction between an enterprise and its related enterprise does not comply with the arm’s length principle;
• Where the enterprise defers China tax on offshore profits parked in tax havens for non-operation purpose, the profits will be deemed to be attributed to the China resident enterprise even if profits have not been distributed or insufficient profits are allocated to the China resident enterprise;
• The ratio of loans to capital (both received from the enterprise’s related parties) should be capped with a specific rate. Excess interest expense shall not be deductible.

新税法中规定了哪些反避税措施？

新税法制定了以下反避税规定，包括：

• 企业与其关联方之间的业务往来如果不符合独立交易原则而减少企业的应纳税所得的，税务机关有权按照合理方法进行调整，需要补征税款的应加收利息；加强对关联交易申报的要求以促进反避税检查；
• 中国企业利用避税港，并非由于合理的经营需要而对利润不作分配或者减少分配的，应归属于该居民企业的利润应被计入该居民企业的当期收入；
• 企业从其关联方接受的债权性投资与权益性投资的比例超过规定标准而发生的利息支出，不得在计算应纳税所得额时扣除。