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Are there incentives to foreign investment in China?

Are there incentives to foreign investment in China?

After the entry into force of the new Company Tax Law of 2008, the tax treatment of foreign and local companies was unified. All companies are subject to a rate of 25% or 20% for small companies and non-profit companies. Generally, the new law grants preferential treatment to certain companies based on the criteria of the type of industry in which they operate rather than the location. The most important tax incentives are the following:

  • The existence of free zones on the coast of the country, which present different tax exemptions or tax incentives to attract foreign investments.
  • High-tech companies, as defined by the State, can choose to pay taxes by 15%, regardless of the location.
  • Those strategic emerging industries defined as such in the 13th Five-Year Plan (new information technologies, high-value-added equipment manufacturing, new materials, vehicles powered by alternative energies, alternative energies, energy efficiency and environmental protection, and biotechnology) they will be eligible for grants from a fund established for their promotion, which will amount to between 10 and 14 billion RMB during the entire plan.
  • The services sector has a pilot program launched in 2016 to encourage the entry of foreign companies into the country. This includes tax reductions, preference in access to financing and financial aid, especially to small and medium enterprises.

Companies that invest in the western part of the country will benefit from a reduced tax rate of 15% on Corporate Tax until the end of 2020.

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