China Conducts Tax Preferences for Its West Regions

Notice of China's Ministry of Finance, General Administration of Customs and State Administration of Taxation on Taxation Policies for Development of the West Regions of China (CaiShui [2011] No. 58)

In order to support the strategy of developing the west regions of China, the Chinese authorities aforesaid have granted relevant tariff exemption to any imports of private-use equipment within a gross investment for any State-encouraged domestic-funded or foreign-invested industries or other advantageous industries in the west regions.

From January 1, 2011 till December 31, 2020, business income tax may be levied at the reduced rate of 15% on any enterprises belonging to State-encouraged industries located in the west regions.

According to CaiGuanShui [2011] No. 36 notice issued by the three authorities aforesaid, the State-encouraged industrial enterprises refer to any enterprise mainly operating any projects set forth in a Catalog of State-Encouraged Industries in the West Regions and also gaining NO-less-than 70% of its total income from such projects.

Additionally, the business-income-tax preferences of “two exemptions and three halvings” may continue till their expiry dates for transport, electric-power, water-conservancy, postal, and broadcast-television enterprises in the west regions, which are eligible for such preferences as per Article 2 provisions in the Notice on Tax Preferences for Development of the West Regions (CaiShui [2001] No. 202) and officially approved before December 31, 2010.

The west regions herein include China's Chongqing Municipality, Sichuan Province, Guizhou Province, Yunnan Province, Tibet Autonomous Region, Shaanxi Province, Gansu Province, Ningxia Hui Autonomous Region, Qinghai Province, Xinjiang Uygur Autonomous Region, Xinjiang Production & Construction Corps, Inner Mongolia Autonomous Region, and Guangxi Zhuang Autonomous Region.

Besides, other Chinese regions including Xiangxi Tujia & Miao Autonomous Prefecture of Hunan Province, Enshi Tujia & Miao Autonomous Prefecture of Hubei Province, and Yanbian Korean Autonomous Prefecture of Jilin Province, are permitted to conduct tax preferences by referring to those for the west regions.