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Circular of the State
Administration of Taxation Concerning the Enterprise
Income Tax paid by Foreign-Invested Business Starting Investment Companies
the State Administration of Taxation
GuoShuiFa [2003] No. 61
State taxation bureaus and local taxation bureaus of provinces,
autonomous regions, municipalities directly under the Central
Government and municipalities separately listed on the State plan:
In order to encourage foreign companies, enterprises, other economic
organizations or individuals (hereinafter referred to as foreign
investors) to take up business starting investment in China, the
Ministry of Foreign Trade and Economic Cooperation, the Ministry of
Science and Technology, the State Administration for Industry and
Commerce, the State Administration of Taxation and the State
Administration of Foreign Exchange jointly promulgated the
Provisions on Administration of Foreign-Invested Business Starting
Investment Enterprises (2003 No. 2 Decree, hereinafter referred to
as Administration Provisions) in January of 2003.
Concerning the issues related to enterprise income tax of
foreign-invested business starting investment enterprises
(hereinafter referred to as FIBSIE), it is hereby clarified as
follows in compliance with the Income Tax Law of the People''s
Republic of China for Enterprises with Foreign Investment and
Foreign Enterprises (hereinafter referred to as Tax Law) and its
rules for the implementation.
I. According to the relevant provisions, the FIBSIE engaged in stock
equity investment and transfer and providing business starting
investment management service and consultative service to
enterprises do not belong to productive enterprises stipulated by
Article 72 of Tax Law and cannot enjoy the preferential tax
treatment stipulated by Tax Law to productive enterprises with
foreign investment.
II. The FIBSIE organized as a legal entity should declare and pay
enterprise income tax with FIBSIE as one taxpayer according to Tax
Law.
III. The FIBSIE not organized as a legal entity may declare and pay
enterprise income tax by different investors respectively according
to Article 7 of detailed rules of Tax Law; or it may declare and pay
enterprise income tax as a whole according to Tax Law after its
application is approved by local tax organs.
If the FIBSIEs, which are not organized as a legal entity, declare
and pay enterprise income tax by investors respectively, foreign
investors should calculate and pay enterprise income tax as foreign
companies establishing agencies or offices in China. But for those
FIBSIEs without a legal entity, which do not establish business
starting investment management agencies and do not take up business
starting investment management and consultation directly, but
authorize one business starting investment management enterprise or
another FIBSIE to manage and operate, foreign investors could
declare and pay enterprise income tax as foreign enterprises not
establishing agencies and offices in China.
IV. The FIBSIE, this circular mentioned, refers to enterprises with
foreign investment that are approved by legal procedure and engaged
in business starting investment according to the requirement and
conditions of Administration Regulations. The names of the
enterprises should include the characters of business starting
investment.
V. This circular shall enter into force as of March 1, 2003. |
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