CIRCULAR ON THE QUESTION CONCERNING HOW ENTERPRISE WITH FOREIGNINVESTMENT WHICH CONCURRENTLY ENGAGE IN PRODUCTIVE AND NON-PRODUCTIVEBUSINESS ENJOY PREFERENTIAL TAX TREATMENT
CIRCULAR ON THE QUESTION CONCERNING HOW ENTERPRISE WITH FOREIGNINVESTMENT WHICH CONCURRENTLY ENGAGE IN PRODUCTIVE AND NON-PRODUCTIVEBUSINESS ENJOY PREFERENTIAL TAX TREATMENT
(State Administration of Taxation: 19 September 1994 Coded GuoShui Fa [1994] No. 209)
Whole Doc.
To the state tax bureaus of various provinces, autonomous regions and
municipalities, the state tax bureaus of various cities with independent
planning, and various sub-bureaus of Offshore Oil Tax Administration:
In line with the related stipulations of the Income Tax Law of the
People's Republic of China on enterprise with foreign investment and
Foreign Enterprises and the Detailed Rules for Its Implementation
(hereinafter referred to as the Tax Law and Detailed Rules), we hereby
notify you of the following question concerning applicable preferential
tax treatment to enterprise with foreign investment which engage
concurrently in productive and non- productive business (hereinafter
referred to as enterprise with foreign investment engaging in concurrent
operations):
I. If no productive business is included in the business scope
prescribed in their business license, no enterprise with foreign
investment shall enjoy related preferential tax policies as granted to
productive enterprises, no matter how large is the proportion of the
productive business is in their actual business activities.
II. If the business scope prescribed in the business license of a
enterprise with foreign investment covers both productive and
non-productive business, or if the business scope prescribed in the
business license covers only productive business, but the enterprise
actually engages in non-productive business, the applicable preferential
tax policy can be determined in accordance with the following methods:
(1) Within the period of tax reduction and exemption calculated from
the profit-making year of an enterprise as specified in Article 8 of the
Tax Law, a enterprise with foreign investment engaging in concurrent
operations may, in the year when the enterprise's productive business
income exceeds 50 percent of all its business income, file an application
which, after being examined and approved by the competent tax authorities,
enjoy appropriate treatment of tax reduction and exemption in the year'
but if its productive business income does not exceed 50 percent of all
its business income in the year, the enterprise shall not enjoy the
appropriate preferential treatment of tax exemption and reduction in that
year.
(2) A enterprise with foreign investment engaging in concurrent
operations which is set up in the area where tax is levied at a reduced
tax rate as specified in Article 7 of the Tax Law and by the State Council
shall begin to enjoy related preferential treatment of taxation at a
reduced rate from the year when its productive business income exceeds for
the first time 50 percent of all its business income.
This Circular goes into effect from January 1, 1994.
erential
tax policy can be determined in accordance with the following methods:
(1) Within the period of tax reduction and exemption calculated from
the profit-making year of an enterprise as specified in Article 8 of the
Tax Law, a enterprise with foreign investment engaging in concurrent
operations may, in the year when the enterprise's productive business
income exceeds 50 percent of all its business income, file an application
which, after being examined and approved by the competent tax authorities,
enjoy appropriate treatment of tax reduction and exemption in the year'
but if its productive business income does not exceed 50 percent of all
its business income in the year, the enterprise shall not enjoy the
appropriate preferential treatment of tax exemption and reduction in that
year.
(2) A enterprise with foreign investment engaging in concurrent
operations which is set up in the area where tax is levied at a reduced
tax rate as specified in Article 7 of the Tax Law and by the State Council
shall begin to enjoy related preferential treatment of taxation at a
reduced rate from the year when its productive business income exceeds for
the first time 50 percent of all its business income.
This Circular goes into effect from January 1, 1994.
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