The Enterprises Income Tax Table of EFIs in Hubei
1.5 Rebate on reinvestment tax
Foreign investors of any EFI who reinvest directly in the same EFI with his (her) share of profits so as to increase registered capital, or use his (her) share of profits as capital investment to set up other EFIs whose operation period is no less than five years shall, upon the investors' application having been approved by the relevant competent tax authorities, be rebated 40percent of income tax already paid on the reinvestment amount.
Foreign investors who directly reinvest to start or expand an export-oriented or advanced technology-oriented company shall, upon the investors' application having been approved by the relevant competent tax authorities, will be rebated all of the income tax already paid on the reinvestment amount.
1.6 Income tax deficit offset
For the EFI engaged in production and business, the corporation, organization or places who sustain losses in the initial stage of its operation, may carry the deficit over and make them up in subsequent years. If next year's income still cannot make up, then carry them over again to make up in the following year. But the tax years are within five years.
Income tax deduction
The property losses, upon the approval of the relevant competent tax authorities, shall be entitled to deduct during the enterprises income tax calculation of the period.
If the technical development expense of an EFI in China grows more than 10 percent than the previous year, the enterprise is allowed to deduct the income tax of that year by 50 percent of its actual technical development expense.
1.7 Income tax exemption
The profits foreign investors get form EFIs can be exempted from income tax.
The interest income International Finance Corporation gets in loans to Chinese government or China's state banks can be exempted from income tax.
The interest income foreign banks get from the preferential loan to China's state banks can be exempted from income tax.
1.8 Real estate tax reduction or exemption
The EFIs who construct or buy new plant or houses in the state-level Economic Technological Development Zones in Hubei province shall be entitled to a five-year exemption from real estate tax from the month the construction completes or the houses are bought.
2 Preferential Turnover Tax Policies
2.1 The following items or projects shall be exempted from VAT
a. Self-made produce sold by agricultural producers;
b. Contraceptive medicines and devices;
c. Antique and second-hand books;
d. Imported instruments and equipment that are used directly in scientific research, experiment and education;
e. Materials and equipment provided voluntarily by foreign governments and international organizations;
f. Goods or materials imported according to the contract of processing with materials supplied by foreign clients, the contract of assembling with parts provided offshore or the contract of compensation trade;
g. Goods or devices imported directly by organizations of the disabled, given that those goods or devices are to be used exclusively by the disabled;
h. Used goods of the seller.
i. Building materials made by the over 30 percent coal gangue, stone coal, fly ash, and other recycled materials.
2.2 The following items or projects are exempted from VAT and consumption tax
The goods EFIs import as processing with imported or supplied materials shall be entitled to exemption of import VAT and consumption tax. After the processed goods are exported, VAT and consumption tax are also exempted.
If an EFI doesn't directly export the processed products but transferred to another EFI to assembling supplied and semi-finished parts and then export, the VAT and consumption tax in the production process shall be exempted.
The mechanical and electrical products and building materials produced or sold by EFIs using loan from International Finance Corporation or foreign governments at international bidding approach, shall be exempted from the VAT and consumption tax in the production process, provided the enterprises can provide the successful tenderer certificate, supply contract, invoice and other profiles. The imported materials needed by products which won the bid shall also be free from VAT and consumption tax.
2.3 Preferential policies of import and export tariffs
The parts and raw materials needed in the EFI production of products for export shall be exempted from the import tariff and VAT. To encourage importing equipments of EFIs, all goods except listed on the Catalogue of Non-Tax-Free Imported Commodities of Foreign-Funded Projects, shall be entitled to import tariff and VAT exemption.
2.4 Preferential policies on import and export tax refund
a. Export tax refund or exemption.
The current VAT general taxpayer of approved EFIs, goods or products exported directly or by agency should conduct according to the “tax exemption, reduction and refunding” measures or “refund after collection” approach.
The EFIs approved before December 31, 1993 should shift from former tax exemption measures to imports tax refund measures in self-managed or agency managed exporting products, beginning from January 1, 2001.
b. Purchasing domestic equipments refund
For the EFIs who purchase domestic equipment within the total investment, if such facilities are in compliance with encouraged projects in the Guidance Catalog of Industry with Foreign Investment of the Notice of the State Council on Adjusting the Taxation Policies on Imported Equipment and the Current Catalogue of Key Industries, Products and Technologies the Development Encouraged by the State, the domestic equipment VAT shall be fully refund.
c. Tax refund upon levy on software product or integrated circuit
From June 24, 2000 to the end of 2010, self developed software products sold to the general VAT taxpayer shall refund the tax levied upon the more than 3percent part of tax bearing ratio, after levied 17 percent of VAT.
The tax refund is for software products research and development and expanded reproduction. It is not included in the taxable income, thus no enterprise income tax shall be levied upon the refund.