Main Tax of Company in China

Lindsey Liang   |   August 31, 2021

Taxation is quite complicated in China, the bellowed info for your reference.

1. Here is the main tax for LLC in China

            (1) the Business Tax of services is 5%; like technology service, agent service, consult service;

             Sample: New company receive CNY1000 service fee, should pay Business Tax is CNY1000*5%=CNY50.

              (2)Value Added Tax of goods: 3% OR 17% (Small company VAT rate is 3%; Large company, like Annual Sale amount > CNY800,000, the rate is 17%)

             Sample 1: New company sell some goods and receive sale amount CNY1000 (Including VAT), should pay VAT is CNY1000/(1+3%) *3%=CNY29.13

             Sample 2: New company sell some goods and receive sale amount CNY1000 (Not including VAT), and the cost of the goods is CNY500(Not including VAT).

             Should pay VAT is CNY1000*17%-CNY500*17%=CNY85.

             If the company doesn’t sell goods, don’t need to pay VAT.

             (3)Corporate Income Tax: 25%* Net Profit. (Net Profit=All sale amount- All cost- All expense). If the net profit is negative, don’t need to pay Corporate Income Tax.

2. For Rep Office, they should pay tax according to their expenses as no income, the formula as bellowed from 2010.

(1) Business tax=expenses amount÷(1-15%-5%)×5%×100%

(2) Corporate Income Tax=expenses amount÷(1-15%-5%)×10%×22%×100%

3. If you are doing business about import and export, the tax will involve to duty, and other preferential tax policies.

Different Product, different duty; 

And factory is different with trading company about VAT calculation.

4. And there are preferential tax policies in Free Trade Zone, like when import produce from overseas, don’t need to pay duty, VAT, and when sell it within Free Trade Zone, don’t need to pay VAT. After processing the produce in Free Trade Zone, and export oversea customers, no need to pay duty, VAT… You only pay VAT when you sell produce outside Free Trade Zone to other cities in Mainland China.

Above info only for reference.