Preferential Policies For Reinvestment In Income Tax Of Foreign-Funded Enterprises

Foreign investors of a foreign invested enterprise will directly reinvest the profits obtained from the enterprise, increase the registered capital, or set up other foreign investment enterprises as capital investment, with a operating period of less than five years, and return the 40% tax of the reinvested part of the income tax after the application of the investor and the approval of the tax authorities.

Foreign investors will directly reinvest in China, hold and expand export enterprises or advanced technology enterprises, and foreign investors will directly reinvest in the infrastructure construction projects and agricultural development enterprises in the Hainan Special Economic Zone, and the business period is not less than five years. If approved, they can refund all the enterprise income tax paid by the reinvestment portion of Hainan.

After refunding tax refund, the tax authorities should manage the tax refund for reinvestment.

If a re investment is withdrawn in less than five years, the refund tax shall be paid back; if the standard of the advanced technology enterprise has not been qualified after the reexamination fails to meet the standards of the export enterprise within three years after reinvestment, the 60% of the tax refund shall be returned.

The above provisions are a constraint.

But even if the tax is paid back in the future, it will still be an interest for reinvestors, because it has utilized the time value of money funds.