There are 11 kinds of taxes currently applicable to the enterprises with foreign investment, foreign enterprises and/or foreigners, namely: Value Added Tax, Consumption Tax, Income Tax on Enterprises with Foreign Investment and Foreign Enterprises, Individual Income Tax, Resource Tax, Land Appreciation Tax, Urban Real Estate Tax, Vehicle and Vessel Usage License Plate Tax, Stamp Tax, Deed Tax,  and Customs Duties. 

Compatriots from Hong Kong, Macao and Taiwan and overseas Chinese and the enterprises with their investment are taxed in reference to the taxation on foreigners, enterprises with foreign investment and/or foreign enterprises. In order better to encourage inward flow of funds, technology and intelligence, China provides numerous preferential treatments in foreign taxation, and has successively concluded tax treaties with 107 countries (by June, 2019): Japan, the USA, France, UK, Belgium, Germany, Malaysia, Norway, Denmark, Singapore, Finland, Canada, Sweden, New Zealand, Thailand, Italy, the Netherlands, former Czechoslovakia, Poland, Australia, Bulgaria, Pakistan, Kuwait, Switzerland, Cyprus, Spain, Romania, Austria, Brazil, Mongolia, Hungary, Malta, the United Emirates of Arab, Luxembourg, South Korea, Russia, Papua New Guinea, India, Mauritius, Croatia, Belarus, Slovenia, Israel, Viet-Nam, Turkey, Ukraine, Armenia, Jamaica, Iceland, Lithuania, Latvia, Uzbekistan, Bangladesh, Yugoslavia, Sudan, Macedonia, Egypt, Portugal, Estonia, and Laos, Seychelles, The Philippines, Ireland, South Africa, Barbados, Moldova, Katar, Cuba, Venezuela, Nepal, Kazakhstan, Indonesia, Oman, Nigeria, Tunis, Iran, Bahrain, Greece, Kyrgyzstan, Morocco, Srilanka, Trinidad and Tobago, Albania, Brunei, Azerbaijan, Georgia, Mexico, Saudi Arabia, Algeria, Tajikistan, Ethiopia, Turkmenistan, Czech, Zambia, Syria, Uganda, Botswana, Ecuador, Chile, Zimbabwe, Cambodia, Kenya, Gabon, The Republic of Congo, Angola and Argentina. 100 of which have been in force.

Value Added Tax

(1)   Taxpayers 

The VAT taxpayers include any enterprises, units and other individuals engaged in sales of goods, provision of services of processing, repairs and replacement (hereinafter referred to as 'taxable services' in short), sales of intangible assets, immovable assets and importation of goods within the territory of the People's Republic of China.

(2)    Taxable Items and Tax Rates 

Table of VAT Taxable Items and Rates

(3)   Computation of Tax Payable

a.   General Taxpayers

To compute the VAT payable, the normal taxpayers need to calculate the output tax and the input tax for the current period separately. Then the difference between the output tax and the input tax shall be the actual amount of VAT payable. The formula for computing the tax payable is as follows:

Tax Payable = Output Tax for the Current Period - Input Tax for the Current Period 
Output Tax Payable = Sales Amount for the Current Period x Applicable Tax Rate

A notice about VAT reform was published by China Ministry of Finance, State Bureau of Taxation and General Administration of Customs in March 2019. According to this notice, from April 1, 2019 to December 31, 2021, taxpayers who meet required terms and conditions can add 10% of deductible input VAT in current period to offset against VAT payable.

b.  Small-scale Taxpayers

Small taxpayers are taxed on the basis of the revenue derived from sales of goods or taxable services, sales of intangible assets, immovable assets and importation of goods by applying derived rates of 3% and 5%. The computing formula is:

Tax Payable = Sales Amount （VAT Exclusive） x Applicable Derived Rate

c.   Importation

  The imported goods are taxed on the basis of the composite assessable price by applying the applicable tax rate.

d.  VAT Refund for Exportation

The tax refund of export goods refers to the return of the VAT of the goods which has been paid for the goods exportation to outside of territory of China in the international trade according to the tax law, the enterprises with export rights of export goods (unless otherwise specified), need to complete the export customs declaration, accounting treatment of sales, and can claim the VAT refund after get approval from tax authorities by providing the relevant proof to authorities monthly. At present, the refund rates are 0%, 6%, 9%, 10% and 13%.

(4)   Tax exemptions 

The exempted items include: self-produced primary agricultural products sold by agricultural producing units and individuals; contraceptive medicines and devices; antique books; instruments and equipment imported for direct use in scientific research, experiment and education; imported materials and equipment granted by foreign governments or international organizations; articles imported directly by organizations for the disabled for exclusive use by the disabled; sales of  second-hand goods.