China reduced Corporate Income Tax rate at 15% for investing in China’s Western Regions until 2030

The Ministry of Finance, the State Taxation Administration and the National Development and Reform Commission (NDRC) jointly issued an announcement on the continuation of the Western Development Enterprise Income Tax Policy (Announcement No. 23 [2020]). 

The announcement stated that from January 1st, 2021 to December 31st, 2030, corporate income tax will be levied at a reduced rate of 15% (China’s standard corporate income tax rate is 25% percent) on encouraged industrial enterprises located in the western region, foreign invested companies included. 

These refer to enterprises whose main business belongs to the industries specified in the “Catalogue of Encouraged Industries in the Western Regions” and in order to enjoy the preferential tax rate, a company’s main business revenue must account for at least 60% of its total business revenue. 

The “Catalogue of Encouraged Industries in the Western Regions” is prepared under the leadership of the NDRC. The List varies from region to region, with about 30 different industries listed for each.

The announcement mentioned that if the catalogue is revised within the execution period of this announcement, it will be implemented as the new version from the date of implementation of the revised version.

In the follow-up management, if the tax authorities cannot accurately determine whether the main business of the enterprise belongs to the industry projects encouraged by the state, they may request the development and reform departments and other relevant departments to give opinions.

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