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【Webinar review】Corporate tax and social insurance in China

· Tax,News

Yesterday Fintegrity hold the third session of the series webinars. This article will summarize basic information about corporation tax and social insurance in China.

  • Corporate Finance challenge of SMEs

Lack of CFO sustainability

Up to 50% smaller and bigger projects fails due to lack of CFO that manage and implement a financial sustainability.

Lack of Accounting sustainability

Improper accounting leads to many future problems for company, like hidden cost that would cost the company 3-5 times more than the “saved” amount of doing it correctly.

  • Maintenance of companies in China

Reporting to the local government

Book accounting

Edit financial report by following Chinese accounting principle either via authorized accounting firm or internal book keep by verified accounting professionals. (Fapiao, invoice and contract for both clients and vendors)

  • Value Added Tax (VAT)

Value-added tax refers to a kind of indirect tax levied on the value-added value added of taxpayers' production and operation activities. It is a kind of turnover tax levied on the basis of the value-added value generated in the process of circulation of commodities (including taxable services)

The tax rates applicable to general taxpayers are: 13%, 9%, 6%, 0%, etc.

  • Corporate Income Tax (CIT)

The enterprise income tax is a kind of income tax levied on the income from production and operation and other income of enterprises and other income organizations within the territory of China.

General: CIT is 25%.

Micro business company: Asset below RMB 50 million, less than 300 employees, corporate income less than 3 million.

Corporate profit below 1 million: 5%

Corporate profit that above 1 million and below 3 million: 10%

Recognized high tech companies: 3.75% CIT

A non-resident enterprise: 10%

  • Individual Income Tax(IIT)

Monthly IIT = (accumulated income - accumulated five social insurance and one housing fund - accumulated special additional deduction - accumulated expenses) x withholding tax rate - quick deduction - accumulated tax paid.

Annual salary below RMB 60,000: 0 taxable income => 0 IIT.

  • Beneficial policies during Coronavirus

VAT for smaller scale taxpayer: 1%