Recently, the Ministry of Finance of China and the State Taxation Administration of China issued a notice to specify qualifications for enterprises in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin to enjoy tax reductions or exemptions.

(Photo / Nanfang Daily)

Last September, China released a plan for building the Hengqin Cooperation Zone, that proposed various preferential tax policies, including corporate income tax.

The new policy is the first time to clarify detailed conditions for enterprises that can enjoy preferential treatment with a catalog covering more industries, said an official of the Department of Finance of Guangdong.

In detail, enterprises that are subject to the preferential corporate income tax rate of 15% should meet the following requirements.

At first, they should engage in the industries listed in the Hengqin Cooperation Zone Corporate Income Tax Preferential Catalogue (2021 Edition)(attachment in Chinese: http://czt.gd.gov.cn/attachment/0/490/490524/3941545.pdf), those industries include high-tech industry, traditional Chinese medicine, tourism, modern service and others.

Then the main business income should account for 60% of the enterprises' total. And the enterprises are required to conduct substantive operations in the Cooperation Zone, that means they should set up a management organization in Hengqin, implementing management for production, personnel, accounting and more.

In addition, corporate income tax exemption is granted for income obtained from the new overseas direct investment of the tourism, modern service and high-tech enterprises established in the Cooperation Zone.

Compared with Hengqin's previous corporate income tax preferential catalogue, the new edition covers 9 categories of 150 sub-industries such as integrated circuit design, AI products and other sectors. It will help the Cooperation Zone to develop new technologies, industries and business models.

Author: Will

Editor: Wing, Steven, Jerry