China Tax Compliance Map

Email: pek4ww@evershinecpa.com
or
Beijing Evershine BPO Service Limited Corp.
17D, Oriental Kenzo Apartment C, No. 48 Dongzhimen Outer St.,
Dongcheng Dist., Beijing, China
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
LinkedIn address:Dale Chen

GLA – China Corporate Income Tax

GLA-CN-01 GLA Tax Entity

Question from client:
Is China corporate income tax a central income tax? A province income tax? Or is there a central and province income tax?
What if the central income tax and the province income tax are levied separately or levied together?
What is the standard tax rate? What is the special tax rate?

Answer from Evershine RD:
China taxations are imposed at a central level.
There is no local or provincial income tax in China.
Corporate Income Tax for all companies in China is at a standard rate of 25%.
Qualified small and low-profit companies:

Annual Taxable Income	Tax Rate
< 1,000,000	2.5%
1,000,000 – 3,000,000	10%
> 3,000,000	25%

Qualified small and low-profit companies, is defined as:

Annual taxable income is below RMB 3,000,000.
Employee count is below than 300 persons.
Total assets are below RMB 50,000,000.

GLA-CN-02 Registration

Question from client:
Which government unit is responsible for the collection of China corporate income tax?
The registration of the country’s corporate income tax status, that is, the tax certificate number application procedure, paper certificate number application? Or online account application? URL?
What is the advance certificate number for applying for this certificate number?
Do I need to use the industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
Corporate income tax is administered by the State Administration of Taxation (SAT).
http://www.chinatax.gov.cn

The STA manages Chinese tax collection and administration.
The STA administers provincial-level tax bureaus, which in turn govern city-level tax bureaus, and district-level bureaus.
District-level tax bureaus may maintain necessary tax offices in different locations within their districts.
Entities need to be registered with tax authority or industry & commerce authority to obtain their TIN or Uniform Social Credit Code which is recognized as TIN.

Unified comprehensive licensing:

In late 2015, China launched a comprehensive business licensing reform aimed at simplifying China’s business institutions and tax registration procedures.
Five certificates being unified in one include Business License, Organization code, Tax Registration certificate, social security registration certificate and statistical registration certificate.

Application-

When a taxpayer applies for tax registration, he should first go to the competent tax authority or the designated tax registration office, fill in the <application for tax registration report>, and present the following certificates and materials accordingly:
(1) Business license or other approved practice certificates.
(2) Relevant contracts, articles of association, and agreements.
(3) Bank account number certificate. Etc.

The tax authority shall complete the review within 30 days from the date of acceptance.
If it meets the requirements, it shall register, issue a tax registration certificate or a registered tax registration certificate and a copy thereof, and fill in a tax type registration form by tax type to confirm the tax type and tax of the taxpayer. Items, tax rates, etc.
Taxpayers of enterprises and organizations shall use the 9-digit code compiled by the State Technical Supervision Bureau and add a 6-digit administrative division code to the front to provide a 15-digit code as their taxpayer identification number.

GLA-CN-03 GLA Order (OD)

Question from client:
What is the order of China corporate income tax return (information flow determines tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit first (DF). Pay PAYG installment and declare later.
The tax is paid monthly or quarterly (within 15 days of the period end), and then reconciled annually.

GLA-CN-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for China corporate income tax return (information flow determines the tax base)?
Filing cycle: monthly? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: website URL?

Answer from Evershine RD:
Companies are required to submit their tax declarations for the pre-payment of CIT and pay advance taxes within 15 days after the end of each month or quarter.
Whether a company follows a monthly or quarterly schedule of provisional tax filing and payment is determined by the local governing tax authority. Quarterly filings are more common in practice.
Annually, companies are required to settle and file annual Corporate Income Tax payments within 5 months after the end of the tax year (deadline 31 May).
Every local SAT office has its own electronic filing portal.
For example, in Shanghai, companies can submit income tax returns in two ways:

Electronic Taxation Bureau-Log in to <<Electronic Taxation Bureau>-Choose <Tax (Fee) Comprehensive Declaration Package>> on the left-hand package service.
https://etax.shanghai.chinatax.gov.cn/wszx-web/bszm/apps/views/beforeLogin/indexBefore/pageIndex.html#/
Online electronic declaration enterprise terminal-log in to eTax@SH3 online electronic declaration enterprise terminal.
For enterprises that meet the business prerequisites, a prompt box will automatically pop up for the enterprise to choose whether to enable the <<ZH001 tax (fee) comprehensive declaration form>>.

GLA-CN-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for China corporate income tax payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
Companies are required to submit their tax declarations for the pre-payment of CIT and pay advance taxes within 15 days after the end of each month or quarter.
Usually, the tax payable will automatically be withdrawn from the company’s bank account after the signing of a tripartite agreement between the tax authority and the company’s local bank.
Annually, companies are required to settle and file annual Corporate Income Tax payments within 5 months after the end of the tax year (deadline 31 May).
Signing a three-party (Tax Bureau, Taxpayer, and the Bank) agreement with an authorized Chinese Bank. Using RMB Tax account to settle all tax payments to the tax bureau.
The tax amount to be settled each month must be transferred from the RMB Basic Account to the Tax Account.
Once the tax declaration is made, the tax bureau will deduct the tax amount automatically by a certain date.
Several mainland Chinese banks integrated with the Gold Tax System.
An enterprise must first open an account at the bank, and then directly select the bank in the Gold Tax System so that the tax bureau can deduct money directly.

VAT – China VAT

VAT-CN-01 VAT Tax Entity

Question from client:
Is China VAT central VAT? Province VAT? Or is there a central plus province VAT?
What if the central VAT and province VAT are levied separately or levied together?
What is the standard VAT rate? What is the special VAT rate?

Answer from Evershine RD:
VAT is levied and directly supervised by central government, State Administration of Taxation (SAT) and is applicable to the entire territory of China.
The State Tax Bureau in each municipality serves as the local office of the SAT and oversees the actual collection of VAT.
There are no state, provincial, or local indirect taxes in China.
On or after 1 April 2019, China imposes VAT at standard rates of 13%, 9% and 6%.
China has reduced rates of 5%, 2%, 1%, 1.5% and 0.5%.

VAT-CN-02 Registration

Question from client:
Which government unit is responsible for the levying of VAT in China?
The registration of China’s VAT levy status, that is, the application procedure for VAT certificate number, paper certificate number application? Or online account application? URL?
What is the advance certificate number for applying for a VAT certificate number?
Do I need to use an industrial and commercial certificate electronic card to apply?

Answer from Evershine RD:
Under the Law on Administration of Tax Collection (Chairman Order No. 49), as amended, enterprises must apply for tax registration at their local State Tax Bureaus within 30 days of obtaining a business license.
Registration may not be completed online, and hard copies of all required documents must be submitted to the relevant tax bureau.

After logging in to the Shanghai Electronic Taxation Bureau of the State Administration of Taxation, click “I want to apply for tax”, “Tax application and payment”, click “VAT and additional tax declaration” on the left, click “VAT general taxpayer cloud declaration” or “VAT small-scale taxpayer declaration”, Choose how to fill in. Fill up the VAT General Taxpayer Registration Form.

Within 30 days of receipt of the application, the State Tax Service must issue a tax registration certificate or integrated license containing a tax registration code, upon examination and verification of the documents.
The tax registration code of a taxpayer that has already obtained its organizational code consists of the area code and the organizational code. Tax registration codes for entities generally consist of 18 characters.

Taxpayers whose annual taxable sales do not exceed the prescribed standards, with sound accounting and are capable of providing accurate tax information, may apply for general taxpayer registration with the competent tax authority.
VAT taxpayers are required to register as general taxpayers, rather than small-scale taxpayers within 15 working days after the VAT monthly or quarterly filing period ends, if they no longer qualify for the small-scale taxpayer threshold, due to turnover.
Taxpayer with annual turnover below the small-scale taxpayer threshold may also choose to register as general VAT taxpayer if they keep proper record.

VAT-CN-03 WWT Order (OD)

Question from client:
What is the order of China’s VAT declaration (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? First declare and then pay? At the same time as the declaration and payment?

Answer from Evershine RD:

Same Period (SP) – Declare and pay at the same time.

VAT-CN-04 Mechanism of Filing (MOF)

Question from client:
What is the return method for China VAT declaration (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Website URL?

Answer from Evershine RD:
China VAT returns are generally due by the 15^th day of the month following a tax period, which is generally a month (or a quarter for a small-scale taxpayer).
Although not common, the competent Tax Authority may require a taxpayer to file VAT returns every 1, 3, 5, 10 or 15 days or on a case-by-case basis, depending on the amount of VAT payable.
In China, electronic filing is available and optional. The portal is available on the websites of local SAT offices.

VAT-CN-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for China VAT payment (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
OCT payment at the bank counter?
Or the above methods coexist?

Answer from Evershine RD:
All China VAT reported for the month should be paid to the relevant State Tax Bureau by the deadline for filing the VAT returns.
There is no requirement for taxpayers to pay a deposit for potential VAT liability.
China VAT payments must be transferred to the designated bank account of the State Tax Bureau.
Cash payments are not accepted. VAT payments must be remitted in form of fund transfer from a Chinese bank where the taxpayer opens an account. Foreign banks are not accepted.

Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

E-mail: pek4ww@evershinecpa.com
or
Beijing Evershine BPO Service Limited Corp.
17D, Oriental Kenzo Apartment C, No. 48 Dongzhimen Outer St.,
Dongcheng Dist., Beijing, China
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
LinkedIn address:Dale Chen

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(version: 2024/07)

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