China Tax/Business News Flash

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Apr 2014, Issue 6

The Central Government finally nailed down the CIT Incentive Catalogues for Hengqin, Qianhai and Pingtan

According to the policies previously approved by the State Council in respect of the Hengqin New Area (Hengqin), Qianhai Shenzhen-Hong Kong Modern Services Industry Cooperation Zone (Qianhai) and Pingtan Comprehensive Experimental Zone (Pingtan) (hereinafter referred to as ‘the three zones’), qualified enterprises established in the three zones may enjoy a reduced corporate income tax (CIT) rate of 15%. The Catalogues for Industries Permitted (hereinafter referred to as ‘the Industry Catalogues’) in each of the three zones have been released separately in 2013. The market has been eagerly waiting for the respective Catalogue for Encouraged Industries eligible for CIT Preferential Treatment (hereinafter referred to as ‘the CIT Incentive Catalogues’).

The Ministry of Finance (MOF) and State Administration of Taxation (SAT) jointly released Caishui [2014] No.26 (Circular 26) on 27 March 2014 which clarifies the policies for the aforementioned CIT incentive and the respective CIT Incentive Catalogue for the three zones. Investors should understand the scope of the encouraged industries eligible for CIT preferential treatment under the respective CIT Incentive Catalogue and study whether it is time to expand their business into these zones after taking into account the existing business operations and business needs.

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