China Tax Presentation V3
Upcoming SlideShare
Loading in...5
×
 

China Tax Presentation V3

on

  • 2,223 views

 

Statistics

Views

Total Views
2,223
Views on SlideShare
2,219
Embed Views
4

Actions

Likes
1
Downloads
0
Comments
1

2 Embeds 4

http://www.linkedin.com 3
http://www.slideshare.net 1

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • great
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

China Tax Presentation V3 China Tax Presentation V3 Presentation Transcript

  • China Tax Presentation January 21, 2009 Richard Tan Ge Wang
  • Part I Overview of China
  • PEOPLE’S REPUBLIC OF CHINA
  • China Tax Jan 21, 2009 4
  • Chinese Totem Dragon  China Tax Jan 21, 2009 5
  • Location China Tax Jan 21, 2009 6
  • China Tax Jan 21, 2009 7
  • Situated in eastern Asia on the western shore of the  Pacific Ocean An area of 9.6 million square kilometers.  Continental coastline extends for about 18,000  kilometers. Its vast sea surface is studded with more than 5,000  islands, of which Taiwan and Hainan are the largest. China Tax Jan 21, 2009 8
  • Overview China Tax Jan 21, 2009 9
  • Almost 4,000 years of recorded history , one of  the world's most ancient civilizations. China Tax Jan 21, 2009 10
  • The most populous country in the world,  containing about 1/5 of the world's total population. China Tax Jan 21, 2009 11
  • Many different ethnic groups, languages and  religions exist throughout the country. China Tax Jan 21, 2009 12
  • The Four Great Inventions of Ancient China Printing  China Tax Jan 21, 2009 13
  • The Four Great Inventions of Ancient China Paper making  China Tax Jan 21, 2009 14
  • The Four Great Inventions of Ancient China Gunpowder  China Tax Jan 21, 2009 15
  • The Four Great Inventions of Ancient China Compass  China Tax Jan 21, 2009 16
  • Notable figures Confucius  China Tax Jan 21, 2009 17
  • Notable figures Qin Shi Huang  China Tax Jan 21, 2009 18
  • Notable figures Mao Ze Dong  China Tax Jan 21, 2009 19
  • Notable figures Yao Ming  China Tax Jan 21, 2009 20
  • Notable figures Zhang Zi Yi  China Tax Jan 21, 2009 21
  • Place of Interest The Forbidden City  China Tax Jan 21, 2009 22
  • Place of Interest The Great Wall  China Tax Jan 21, 2009 23
  • Place of Interest Temple of Heaven  China Tax Jan 21, 2009 24
  • Place of Interest Terracotta Army  China Tax Jan 21, 2009 25
  • Place of Interest Guilin  China Tax Jan 21, 2009 26
  • Place of Interest Jiu zhai  China Tax Jan 21, 2009 27
  • Place of Interest The Bird’s Net Olympic Stadium  Water Cube  China Tax Jan 21, 2009 28
  • Culture Beijing Opera  China Tax Jan 21, 2009 29
  • Culture Dragon Dance  China Tax Jan 21, 2009 30
  • Culture Chinese Kung Fu  China Tax Jan 21, 2009 31
  • Culture Chinese Kung Fu  China Tax Jan 21, 2009 32
  • Culture Chinese Kung Fu  China Tax Jan 21, 2009 33
  • Tradition Spring Festival  China Tax Jan 21, 2009 34
  • Tradition Spring Festival  China Tax Jan 21, 2009 35
  • Tradition Mid-Autumn Day  China Tax Jan 21, 2009 36
  • Tradition Mid-Autumn Day  China Tax Jan 21, 2009 37
  • Tradition Dragon Boat Festival  China Tax Jan 21, 2009 38
  • Tradition Dragon Boat Festival  China Tax Jan 21, 2009 39
  • Chinese Food Lu Cuisine  China Tax Jan 21, 2009 40
  • Chinese Food Chuan Cuisine  China Tax Jan 21, 2009 41
  • Chinese Food Yue Cuisine  China Tax Jan 21, 2009 42
  • Chinese Food Min Cuisine  China Tax Jan 21, 2009 43
  • Chinese Food Hui Cuisine  China Tax Jan 21, 2009 44
  • Chinese Food Xiang Cuisine  China Tax Jan 21, 2009 45
  • Chinese Food Su Cuisine  China Tax Jan 21, 2009 46
  • Chinese Food Zhe Cuisine  China Tax Jan 21, 2009 47
  • Part II Overview of China Tax China Tax Jan 21, 2009 48
  • Overview of China Tax Tax revenue  Sources of law  Tax administration  Major taxes  Income taxes  Tax treaties  Brief comparison with US tax system  China Tax Jan 21, 2009 49 1/21/2009
  • I. Tax Revenue Billion RMB 30000 25000 20000 Tax Revenue 15000 GDP 10000 5000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Billion RMB 1999 2000 2001 2002 2003 2004 2005 2006 2007 Tax Revenue 1031.50 1266.58 1516.55 1699.66 2046.61 2571.80 3086.58 3763.63 4944.93 GDP 8967.70 9921.45 10965.52 12033.27 13582.28 15987.83 18386.79 21087.10 24661.90 Percentage 11.50% 12.77% 13.83% 14.12% 15.07% 16.09% 16.79% 17.85% 20.05% Data source: China National Bureau of Statistics and China State Administration of Taxation 1/21/2009 China Tax Jan 21, 2009 50
  • II. Sources of Law National People’s Congress (NPC) State Council State Administration Ministry of Finance Other ministries of Taxation (SAT) (MOF) and bureaus under the State Council Structure of political system in China  1/21/2009 China Tax Jan 21, 2009 51 51
  • II. Source of Law Constitution  Laws promulgated by the National People’s  Congress (“NPC”) or its Standing Committee Regulations promulgated by the State Council  Measures and Notices issued by the Ministry  of Finance (“MOF”) or the State Administration of Taxation (“SAT”) China Tax Jan 21, 2009 52 1/21/2009
  • III. Tax Administration Central government  The State Administration of Taxation  Local government  Local Tax Bureaus  State Tax Bureaus at local levels (provincial, municipal)  Criticism and reform  China Tax Jan 21, 2009 53 1/21/2009
  • III. Tax Administration Local Tax Bureaus Mainly in charge of Individual Income Tax, Business Tax, Urban Real estate Tax, Land Appreciation Tax, Deed Tax, Corporate Income Tax (of corporations established before 2002), etc. State Tax Bureaus Mainly in charge of Value-added Tax, Consumption Tax, Corporate Income Tax (of corporations established after 2002), etc. 1/21/2009 China Tax Jan 21, 2009 54
  • IV. Major Taxes Income Taxes  Turnover Taxes  Property and Behavior Taxes  Others  1/21/2009 China Tax Jan 21, 2009 55
  • IV. Major Taxes Income Taxes  Individual Income Tax  Corporate Income Tax  1/21/2009 China Tax Jan 21, 2009 56
  • IV. Major Taxes Turnover Taxes  Value-added Tax  Business Tax  Consumption Tax  Tariff  1/21/2009 China Tax Jan 21, 2009 57
  • IV. Major Taxes Property and Behavior Taxes  Stamp Tax  Deed Tax  Land Appreciation Tax  Urban Real Estate Tax  Resource Tax  Vehicle/Vessel Tax  1/21/2009 China Tax Jan 21, 2009 58
  • IV. Major Taxes Other Taxes  Urban Maintenance and Construction Tax  Other minor taxes  1/21/2009 China Tax Jan 21, 2009 59
  • V-1. Individual Income Tax Taxpayers  Domiciled in China  Subject to tax on world-wide  income. Not domiciled in China  Subject to tax on “China-  sourced income” depending on how long the individual stays in China. 1/21/2009 China Tax Jan 21, 2009 60
  • V-1. Individual Income Tax China Sourced Income Foreign Sourced Income Income paid or Income paid or Income paid or Income paid or borne by borne by borne by foreign borne by foreign employer / employer / employer / employer / establishment in establishment in establishment establishment China China < 90 / 183 (when tax Taxable / / / treaty applies) days 90 / 183 (when tax treaty applies) days – Taxable Taxable / / 1 year 1 year – 5 years Taxable Taxable Taxable / >5 years Taxable Taxable Taxable Taxable A brief explanation of taxable income and days spent in China 1/21/2009 China Tax Jan 21, 2009 61
  • V-1. Individual Income Tax Taxpayers  Partnerships are transparent entities.  No option for choosing to be treated as taxable entity.  The tax liabilities of partnerships flow directly to the partners.  1/21/2009 China Tax Jan 21, 2009 62
  • V-1. Individual Income Tax Taxable Income  wages and salaries from employment;  business income by industrial and commercial  households/entrepreneurs; Income from contracting for or leasing operations of corporations or  institutions; remuneration for personal services performed by an independent  contractor; remuneration for manuscripts;  royalty income;  interest income, dividends and bonuses;  Income from leasing properties;  Income from assignment or transfer of properties;  contingency income;  other income specified to be taxable by the competent authority.  1/21/2009 China Tax Jan 21, 2009 63
  • Individual Income Tax Tax-exempt Income  Monetary awards granted by the Central Government, provincial  Governments, international organizations for achievement in science, education, technology, culture, public health, sport, etc; Interest on State treasury bonds;  Qualified Subsidies, allowances, welfare benefits, etc.;  Insurance indemnities.  Income of diplomatic representatives;  Tax-exempt income as stipulated in international conventions ;  Tax-exempt income as approved by the finance department of the  State Council. China Tax Jan 21, 2009 64 1/21/2009
  • V-1. Individual Income Tax Tax Rates  Rate Monthly Income (RMB¥) (%) Basic Salary - if Employee pays his/her If Tax is borne by Employer Tax ¥500 or below (after deduction of ¥475 or below (after deduction of 5 RMB¥4,800 for expenses) RMB¥4,800 for expenses) The part over ¥500[1] to ¥2,000 The part over ¥475 to ¥1,825 10 The part over ¥2,000 to ¥5,000 The part over ¥1,825 to ¥4,375 15 The part over ¥5,000 to ¥20,000 The part over ¥4,375 to ¥16,375 20 The part over ¥20,000 to ¥40,000 The part over ¥16,375 to ¥31,375 25 The part over ¥40,000 to ¥60,000 The part over ¥31,375 to ¥45,375 30 The part over ¥60,000 to ¥80,000 The part over ¥45,375 to ¥58,375 35 The part over ¥80,000 to ¥100,000 The part over ¥58,375 to ¥70,375 40 The part over ¥100,000 The part over ¥70,375 45 Tax rate schedule for wages and salaries, stipulated by Individual Income Tax Law of China 1/21/2009 China Tax Jan 21, 2009 65
  • V-1. Individual Income Tax Tax Rates  Incomes Rate Business income by industrial and commercial Progressive rate from households/entrepreneurs 5% to 35% Remuneration for personal services performed by an independent Progressive rate from 20% to 40% contractor; 20%, with deduction Remuneration for manuscripts of 30% in taxable income Royalty income, interest income, dividends and bonuses; income from leasing properties; 20% income from assignment or transfer of properties; contingency income 1/21/2009 China Tax Jan 21, 2009 66
  • V-1. Individual Income Tax Tax calculation (salary)  Tax liability = (Salary amount – standard deduction ) *  applicable tax rate Possible reforms in the future  A higher threshold  Flexible deductions  Joint returns  China Tax Jan 21, 2009 67
  • V-2. Corporate Income Tax Corporate Income Tax Law, effective from January 1, 2008  Detailed Implementation Rules of the Corporate Income Tax  Law Transitions from old systems to the new unified system  Other Notices and Interpretations issued by the MOF and SAT  1/21/2009 China Tax Jan 21, 2009 68
  • V-2. Corporate Income Tax Reform from 2008  Before Jan 1, 2008 After Jan 1, 2008 Two previous parallel systems: one for One unified system domestic corporations and the other for foreign invested corporations General tax rate: 33% General tax rate: 25% Tax holidays and incentives for foreign Industry-based tax incentives invested corporations; without geographic limitation Preferential tax measure in Special Economic Zones Tax refund for reinvestment Appealed Thin capitalization, anti- avoidance measures 1/21/2009 China Tax Jan 21, 2009 69
  • V-2. Corporate Income Tax Taxpayers  Resident corporations  Incorporated in China  Incorporated outside of China but effectively managed in China  Subject to tax on worldwide income  Non-resident corporations  Subject to tax on China sourced income  1/21/2009 China Tax Jan 21, 2009 70
  • V-2. Corporate Income Tax Taxable Income  Accrual basis  Monetary and non-monetary revenue  Revenue from sale of goods  Revenue from provision of services  Revenue from transfer of property  Dividends, profit distribution and other returns on equity  investment Interest  Rent  Royalties  Donation, and  Other revenue  1/21/2009 China Tax Jan 21, 2009 71
  • V-2. Corporate Income Tax Deductions  Reasonable expenses incurred by the corporations in  connection with the deriving of revenue, including costs, fees, taxes, losses, etc. can be deducted when calculating taxable income. Donation, capped at 12% of total annual profit  Loss carry-forward for up to 5 years  1/21/2009 China Tax Jan 21, 2009 72
  • V-2. Corporate Income Tax Tax Rates  25% for normal resident corporations  20% for qualified small-scale corporations  15% for qualified High and New Technology Corporations  20% normal withholding tax rate for non-resident  corporations, subject to special provisions or tax treaties 1/21/2009 China Tax Jan 21, 2009 73
  • V-2. Corporate Income Tax Withholding Tax Rates  Dividends – 10%  Interest – 10%  Royalties and fees – 10%, generally subject to additional  Business Tax of 5% The above rates may be reduced by an applicable tax treaty  1/21/2009 China Tax Jan 21, 2009 74
  • V-2. Corporate Income Tax Tax Incentives  Exemption or 50% exemption for income from  Encouraged agricultural activities  Qualified infrastructure projects  Qualified Environmental protection projects  Qualified technology transfer  Super deduction for R&D expenses  Accelerated depreciation for technology advancement  1/21/2009 China Tax Jan 21, 2009 75
  • V-2. Corporate Income Tax Anti-avoidance Rules  Thin capitalization  Controlled foreign company  Transfer pricing  Cost sharing  Documentation requirements  Foreign tax credit – credit system  China Tax Jan 21, 2009 76 1/21/2009
  • VI. Tax Treaties Up till Jan 1, 2009, 87 tax treaties plus tax  arrangement with Hong Kong and Macau Australia Belgium Brazil  Canada France Germany  India Japan Kazakhstan  Luxembourg Netherlands  Portugal Russia Singapore  Sweden Switzerland United Kingdom  United States  Reference on OECD Model though China is not an OECD  member 1/21/2009 China Tax Jan 21, 2009 77
  • VII. Brief Comparison with US Tax System No AMT  No Branch Tax  No “check-the box rule”  No distinction between “ordinary income” and  “capital gain” No consolidated filings unless specially  approved 1/21/2009 China Tax Jan 21, 2009 78
  • Thank you! Welcome to China! China Tax Jan 21, 2009 79