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Q: When did China's Company Income Tax Law come into effect?

A: January 1, 2008.

Q: What was the main goal of the 2007 Company Income Tax reform?

A: To unify tax rules for domestic and foreign companies, remove foreign privileges, and align with Western laws.

Q: Which tax replaced the Business Tax in 2016?

A: Value Added Tax (VAT) under the VAT Pilot Scheme.

Q: What were the major 2018 changes to the Individual Income Tax Law?

A: New residency definition, 6-year rule, and anti-avoidance clause.

Q: Who are the main legislative authorities for tax law in China?

A: NPC, State Council, State Administration of Taxation (SAT), Ministry of Finance (MoF).

Q: What are SAT's main responsibilities?

A: Drafting and implementing tax policies, collecting taxes, social insurance premiums, and non-tax fees, reporting to MoF.

Q: What law defines taxpayers and withholding agents in China?

A: Administration of Tax Collection Law of the PRC (1992, revised 2015).

Q: When must new entities register for tax in China?

A: Within 30 days of receiving the business license.

Q: What is the daily late payment fine rate for unpaid taxes?

A: 0.05% per day from due date.

Q: Deadline for IIT annual settlement for domestic income?

A: March 1 - June 30 after year end.

Q: Deadline for CIT quarterly filing?

A: Jan 15, Apr 15, Jul 15, Oct 15.

Q: How is a resident taxpayer defined under Chinese IIT law?

A: Domiciled in China or stays 183+ days in the tax year.

Q: What income is taxable for resident taxpayers?

A: Worldwide income (China + foreign-sourced).

Q: When does a non-domiciled taxpayer in China start paying IIT on worldwide income?

A: After 183+ days/year for more than 6 consecutive years, starting from the 7th year.

Q: How can the six-year clock for worldwide taxation be reset?

A: By leaving China for 30+ days in one single trip during a year with 183+ days of residence.

Q: What is considered comprehensive income for IIT purposes?

A: Employment income, personal service remuneration, author's remuneration, and royalties.

Q: Name three examples of income always deemed China-sourced.

A: Work performed in China, leasing property for use in China, royalties for IP used in China.

Q: How is business income taxed compared to comprehensive income?

A: Business income is taxed separately; comprehensive income is taxed on a consolidated basis.

Q: When did the six-year rule counting start?

A: January 1, 2019.

Q: Give two examples of occasional income.

A: Lottery winnings and prize money.

Q: When is overseas income not taxable in China for a non-domiciled individual?

A: When it's earned from employment outside China and paid by an overseas entity.

Q: How is taxable income split for work done in China and abroad?

A: By the ratio of China working days to total working days in the period.

Q: Who is always taxed on all pay as China-sourced income regardless of where work is performed?

A: Non-domiciled senior executives of a China company.

Q: What is the progressive IIT range for comprehensive income?

A: 3% - 45%.

Q: What's the flat IIT rate for dividends, capital gains, and property lease income?

A: 20%.

Q: How is author's remuneration taxed?

A: 20% flat rate on 70% of the post-deduction amount.

Q: What system is used for monthly employment income withholding in China?

A: Cumulative withholding system.

Q: What is the standard annual deduction for resident individual taxpayers in China?

A: CNY 60,000/year.

Q: What is the monthly standard deduction for non-resident taxpayers?

A: CNY 5,000/month.

Q: How is the preferential year-end bonus tax calculated for residents?

A: Bonus ÷ 12 → find tax rate & quick deduction → Tax payable = Bonus × Rate - Quick Deduction.

Q: What is the highest IIT rate for business income in China?

A: 35% for taxable income over CNY 500,000/year.

Q: What is the flat IIT rate for interest, dividends, and occasional income?

A: 20%, no deductions.

Q: How long must you hold listed company shares to get a dividend tax exemption?

A: More than one year.

Q: What is the flat tax rate for property leasing income in China?

A: 20%, with 20% expenses deduction (or CNY 800 if rent ≤ CNY 4,000)

Q: What is the flat IIT rate on gains from transfer of property in China?

A: 20%, after deducting original value and reasonable expenses.

Q: What is the standard annual deduction for residents vs monthly deduction for non-residents?

A: Residents → CNY 60,000/year; Non-residents → CNY 5,000/month.

Q: List three types of social insurance contributions deductible for IIT.

A: Pension, medical, unemployment (plus maternity, work injury, housing fund).

Q: What is the annual deduction for children's education under special additional deductions?

A: CNY 12,000/year per child.

Q: Name two tax-free allowances for foreigners valid until end of 2027.

A: Housing allowance; Two return flights/year to home country (also meals, laundry, relocation, language training, kids' education).

Q: What is the deduction for property leasing income if rent ≤ CNY 4,000?

A: CNY 800.

Q: What is the purpose of the Foreign Tax Credit (FTC)?

A: To offset Chinese IIT with foreign tax paid, up to a calculated limit, to avoid double taxation.

Q: When must overseas income be filed in China?

A: March 1 - June 30 following the tax year.

Q: List two examples of non-taxable income in China.

A: Government awards; interest from state bonds (also welfare benefits, insurance payouts, military payments).

Q: What is the IIT preferential policy rate in Hainan Free Trade Port?

A: Exemption from IIT exceeding a 15% burden, for eligible talent in specific industries.

Q: How long does the GBA preferential IIT policy last?

A: 2019-2027.

Q: What is the standard Company Income Tax rate in China?

A: 25%.

Q: When is a foreign company considered a "resident enterprise" in China?

A: If it is incorporated in China OR managed and controlled from China.

Q: What is the reduced CIT rate for high-tech enterprises with a valid certificate?

A: 15% (valid for 3 years).

Q: What are the criteria for a small low-profit enterprise to enjoy reduced CIT?

A: Annual income ≤ CNY 3M, ≤ 300 employees, assets ≤ CNY 50M.

Q: What is the effective tax rate on taxable income up to CNY 3M for small low-profit enterprises (2022-2027)?

A: 5%.

Q: Name two preferential regions where encouraged industries enjoy 15% CIT.

A: Hainan Free Trade Port, Shanghai Lingang New Area (also Western China, certain free trade zones).

Q: What is the deemed profit rate range for construction, design, and consulting services under CIT?

A: 15%-30%.

Q: Name three examples of taxable income for CIT purposes.

A: Sales of goods/services; dividends; rental income.

Q: What is the minimum useful life for buildings under CIT depreciation rules?

A: 20 years.

Q: What is the special policy for fixed assets ≤ CNY 5M (2018-2023)?

A: Full deduction in year of acquisition (no depreciation).

Q: What is the extra deduction percentage allowed for R&D expenses until 2027?

A: 100% in addition to actual expenses.

Q: What is the maximum deductible percentage for advertising expenses under CIT?

A: 15% of sales revenue (excess can carry forward).

Q: What is the maximum debt-to-equity ratio for deductible interest expenses for non-financial companies?

A: 2:1.

What is VAT in China applied to?

Sales of goods, services, intangibles, real property, and imports.

Who must appoint a local tax agent in China?

Overseas entities without a China establishment performing VAT-taxable transactions.

What is the revenue threshold for small-scale taxpayers?

Annual taxable revenue less than CNY 5,000,000.

What is the key advantage of general taxpayers?

Ability to credit input VAT against output VAT.

What are the main VAT rates in China?

13%, 9%, 6%, 0% (exports).

What happens if mixed activities aren't separately accounted?

The highest applicable VAT rate is applied to all sales.

What is the formula for VAT payable?

VAT payable = Output VAT - Input VAT.

What is the formula for Output VAT?

Output VAT = Taxable Sales × Applicable VAT Rate

When can Input VAT be deducted?

Only when supported by a special VAT invoice, import VAT receipt, or tax payment certificate.

What document adjusts Input VAT for returns/discounts?

A red-letter special VAT invoice.

How is Input VAT on imports calculated?

(Import Price + Customs Duties + Consumption Tax) × VAT Rate.

Who withholds VAT on imported services when the provider has no Chinese establishment?

The purchaser of the service in China.

What are the main conditions for excess Input VAT refund eligibility?

6 consecutive months of incremental VAT credit, credit ≥ CNY 500,000 in month six, good tax rating, no fraud/major penalties.

What industries were prioritized in the 2022 refund expansion?

Manufacturing, scientific research, utilities (electricity/gas/water/heating), software, and IT services.

What are the three categories of exported goods for VAT treatment?

Exemption + Refund

Exemption only (no refund)

No exemption, no refund

What is the typical full refund VAT rate for exports?

13%.

What is the deadline for export VAT refund applications?

Before mid-April of the following year.

What happens if refund documentation is missing or incorrect?

Refund is denied, and the export is reclassified as a domestic sale subject to VAT.

What authority manages customs duties in China?

General Administration of Customs of China (GACC).

What is the formula for ad valorem customs duty?

CD = Dutiable Value × Duty Rate.

What costs are included in the dutiable value of imports?

Purchase price + transportation + insurance (before arrival in China).

What are the two main criteria for determining rules of origin under FTAs?

Wholly obtained and substantial transformation.