1. Scope of Profit
Profit refers to the income derived from the profit after payment or reduction of income tax in accordance with the tax law based on the proportion of investment, equity, shares or other non-credit relationship to share the profit.
2. Reduction and Exemption of Taxes on Profit Income
According to the provisions of the Tax Law and its implementing rules, profits (dividends) obtained by foreign investors from foreign-invested enterprises are exempted from income tax; and the dividends (bonus) income obtained by a foreign enterprise holding B shares or overseas shares from a domestic enterprise in China that issues such B shares or overseas shares is temporarily exempted from enterprise income tax. 1. Scope of interest
Interest on deposits or loans, interest on bonds, interest on advances or deferred payments, etc., obtained by a foreign enterprise from within the territory of China without setting up an organization or place in China. The so-called "arrangement fee", "assumption fee" and "agency fee" in the loan agreement are incurred along with the loan business, and should be treated as interest income for income tax purposes.
Foreign-invested real estate enterprises that borrowed money from foreign banks or foreign enterprises with houses as collateral and failed to repay the principal and interest after the due date and paid the houses to the creditors, if interest is included in the collateralized price obtained by the creditors, withholding income tax shall be levied according to the law.
Foreign leasing companies to provide equipment to users in China by way of financial leasing of the portion of the rent obtained after deducting the price of the equipment, if the interest rate of the lessor's loan interest included therein is not higher than the interest rate of the lessor's national export credit rate, the payer of the rent may withhold withhold withholding income tax on the basis of the remaining balance after deducting the aforesaid interest.
2. Tax deductions and exemptions for interest
1) International financial organizations such as the International Monetary Fund, the World Bank, the Asian Development Bank, the International Development Association, the International Fund for Agricultural Development and other international financial organizations have loaned money to the government of China and the People's Bank of China, the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the China Construction Bank, the Bank of Communications, and other financial institutions approved by the State Council for the foreign operation of foreign exchange Interest income earned by financial institutions that operate foreign exchange deposits and other credit businesses is exempt from withholding income tax.
② foreign banks in accordance with preferential interest rates for loans to China's national banks and trust and investment companies approved by the State Council or the State Council authorized unit of foreign exchange business (excluding foreign-funded financial institutions) of the loan interest income, exempt from withholding income tax.
3 China's companies, enterprises and institutions to purchase technology, equipment and commodities, by the other side of the national bank to provide seller's credit, we are not higher than its buyer's credit interest rate to defer payment of interest paid to the seller to transfer, exempt from withholding income tax.
4 Foreign banks are exempted from withholding income tax on interest on deposits in national banks in China where the interest rate is lower than the interest rate on deposits in the country where the depositing bank is located.
5. The principal and interest of the price of equipment and technology supplied to companies and enterprises in China, which is reimbursed by us in the form of supply, such as product return or delivery, or the principal and interest of the price is offset by the labor contribution for processing and assembly with supplied materials, are exempted from the withholding income tax. If only part of the interest is repaid by supplying products and the price is still to be paid by cash remittance, the interest income should still be subject to withholding income tax. 1, the scope of the rent
Rent refers to foreign enterprises to speak of its own property leased to enterprises, institutions or individuals in China to use the lease income (including the lessee to pay for the packaging costs, transportation costs, insurance and information costs, etc.), which leased property includes: machinery and equipment, scientific instruments, buildings, information transmission equipment, satellites, cables, optical fibers and other communication lines or other similar facilities. other similar facilities.
Foreign enterprises leasing houses, buildings and other immovable properties located in China, which have not set up institutions or places for daily management in China, shall calculate and collect withholding income tax on the rental income they have obtained after deducting business tax, and shall be withheld and paid by the lessees at the time of actual payment; if the lessee is not an enterprise or an institution located in China or is not an individual residing in China, the tax authorities may also instruct the lessee to pay the withholding income tax. If the lessee is not an enterprise or organization in China or an individual not residing in China, the tax authorities may also oblige the lessee to declare and pay the said tax on its own in accordance with the time limit stipulated in the Tax Law.
Foreign enterprises leasing houses, buildings and other immovable properties located in China, where personnel are appointed to carry out day-to-day management of their immovable properties in China, or where the said lessor is a company resident in a non-Agreement country and entrusts other units (or individuals) in China to carry out day-to-day management of its immovable properties, or where the said lessor is a company resident in an Agreement country and entrusts a unit (or individual) in China which is not an independent agent to carry out day-to-day management of its immovable properties. If the said lessor belongs to a company resident in the Agreement country and entrusts a non-independent entity (or individual) in China to carry out daily management of its real estate, the rental income obtained by the lessor shall be subject to enterprise income tax on the basis of the establishment of an organization or a place in China.
2. Reduction and Exemption of Taxes on Rental Income
Foreign companies and enterprises are temporarily exempted from withholding income tax on the rental income from leasing ships to Chinese companies and enterprises for international transportation; however, withholding income tax should still be levied on the rental income from leasing ships from foreign companies and enterprises to Chinese companies and enterprises for the purpose of coastal or inland waterway transportation in China.
The rentals paid for aircraft leasing contracts signed between China's airlines and foreign companies before September 1, 1999 are exempted from withholding income tax; the rentals paid for aircraft leasing contracts signed between China's airlines and foreign companies after September 1, 1999 shall be subject to withholding income tax in accordance with the provisions of the Tax Law and the Implementing Rules, and the tax shall be withheld and paid by civil aviation enterprises at the time of the actual payment of rentals. 1, the scope of royalties
Royalties refer to the royalties charged by foreign enterprises for providing patents, know-how, trademarks, copyrights, copyrights, etc., which are used in China, without setting up institutions or places in China. The royalties for the provision of patents and know-how include fees for drawings and materials, technical services, personnel training (including personnel training outside China) and other related expenses. The withholding tax on the above income is allowed to be deducted from the business tax paid by the foreign enterprise in accordance with the law.
The design fee included in the fee charged for the provision of proprietary technology by a foreign enterprise is an integral part of the price of the entire technology trade contract, which is different in nature from the general design services and belongs to the transfer of the right of use, and should be classified as royalty and be calculated and levied as withholding income tax.
2, royalty tax relief
①For the following income, does not involve the transfer of the right to use the proprietary technology, not to impose withholding income tax: for our enterprises with foreign companies to sign a contract for the purchase of computers and computer software, where the part of the computer software has not been transferred as a patent or copyright should be regarded as a computer-affiliated entity products, the foreigner to transfer the part of the price of the software obtained, can be exempted from the withholding tax. The price obtained by the foreigner can be exempted from withholding income tax; where the part of computer software is transferred as patent or copyright (including programming language, technical method and technical secret, etc.), or where the scope of use of the transferred computer software stipulates restrictive conditions, withholding income tax shall be levied; where the foreigner provides the design and development of the computer software or cooperates in the development of the same as that obtained by the foreigner as requested by the foreigner, all the revenues which do not involve the patent right or copyright of the transferred computer software shall be exempted from withholding income tax. For the income derived from the provision of computer software design and development or cooperative *** same development by foreign investors at our request, which does not involve the transfer of patent or copyright of computer software, no withholding income tax shall be levied; however, for those who have institutions or places in China to engage in contracted design and development services, enterprise income tax shall be levied in accordance with the law in accordance with the institutions and places.
② foreigners to provide for teaching, scientific research, environmental protection, medical and health care, such as film, audio and audio copyright, is really beneficial to Sino-foreign scientific and cultural exchanges, the charges are relatively low, need to be given preferential tax exemption, can be applied by the foreign businessmen, and reported to the State Administration of Taxation for approval.
3 foreign enterprises for China's scientific research, development of energy, development of transportation, agriculture, forestry and animal husbandry production, as well as the development of important technologies and the provision of know-how royalties, approved by the State Administration of Taxation, can be exempted from withholding tax:
First, in the development of agriculture, forestry, animal husbandry and fisheries production to provide the following know-how royalties: improve the soil, grassland, the development of barren mountains, as well as the development of soil, grassland, the development of barren mountains, and the development of the following know-how: improve the soil, grassland, development of barren mountains, as well as technologies for fully utilizing natural resources; technologies for breeding new varieties of plants and animals and producing highly efficient and low-toxic pesticides; and technologies for scientific production management of agriculture, forestry, animal husbandry and fisheries, maintaining ecological balance and enhancing the ability to withstand natural disasters.
Secondly, royalties obtained from the provision of proprietary technologies for scientific research and scientific experiments conducted or cooperated with academies of sciences, colleges and universities and other scientific research institutions.
Thirdly, royalties from the provision of know-how in the development of energy and transportation.
Fourth, royalties for the provision of know-how in energy conservation and prevention of environmental pollution.
Fifth, royalties for the provision of the following know-how in the development of important scientific fields: major advanced electromechanical technology production technology; nuclear energy technology; large-scale integrated circuit production technology; optical integration, microwave semiconductor and microwave integrated circuit production technology and microwave electronic tube manufacturing technology; photoconductive communication technology; long-distance and ultra-high-voltage direct-current power transmission technology; liquefaction and gasification of coal; and integrated utilization technology. Comprehensive utilization technology. Other income obtained by foreign enterprises, including gains from the transfer of property such as houses, buildings and their appurtenances, land use rights and other property in China.
Foreign enterprises are temporarily exempted from withholding income tax on net gains derived from the transfer of B shares and overseas shares issued by Chinese enterprises that are not held by their institutions or establishments located in China.
Foreign enterprises shall be subject to withholding income tax on the portion of the transfer proceeds in excess of their capital contributions derived from the transfer of their shareholdings in foreign-invested enterprises located in China.
Foreign enterprises and foreign-invested real estate enterprises signed a housing underwriting agreement to underwrite houses and buildings for foreign-invested real estate enterprises, and the underwriting business shall be of the nature of the transfer of property in China by foreign enterprises, and withholding income tax shall be levied on the gains from the transfer of houses obtained by the foreign enterprises.
Reference Laws: Article 19 of the Income Tax Law of the People's Republic of China on Foreign-Invested Enterprises and Foreign Enterprises; Circular of the State Council on the Reduction of Income Tax on Interest and Other Income of Foreign Enterprises Sourced in China (Guo Fa [2000] No. 37)