Foreign Firms to Get Chinese Tax Breaks

December 30, 2017 Taxation in China

China taxBEIJING – China hopes to attract more foreign investors into the country by using a series of tax breaks.

The government of China is offering up tax breaks for foreign companies in exchange for re-investing profits into their local operations.

Under the new rules, any foreign business which meets the pre-set criteria and re-invests in profits in China will be eligible to be exempt from paying provisional withholding income tax on the re-invested profits.

The prerequisites include keeping the investments in industries favored by the government, and ensuring that the re-investments flow directly to the target entity and not through some intermediary arrangement.

The government hopes that by encouraging the re-investment of profits into China many companies can be convinced to boost technological development in the country, while also boosting economic productivity and growth.

The new tax break is also aimed at helping China stay internationally competitive against other countries which are trying to attract foreign investment through tax breaks.