Foreign Enterprise Income Tax Preferential Tax For Productive Foreign-Funded Enterprises

In order to encourage foreign businessmen to make productive direct investment, foreign investment enterprises and foreign enterprises income tax law, detailed rules for the implementation of foreign investment enterprises and foreign enterprises income tax law, national tax [1994]209 number, and national tax [1995]121 issued a preferential tax reduction policy for newly established productive foreign investment enterprises.

1., for the productive foreign invested enterprises, with a period of 10 years or more, the enterprise income tax will be exempted in the first and second years from the beginning of the profit year, and the enterprise income tax shall be levied half by third to fifth years. However, it belongs to the petroleum, natural gas, rare metals, precious metals and other resource development projects, and shall be separately stipulated by the State Council.

The term "business term" mentioned here refers to the period from the date of the actual production and operation of foreign investment enterprises (including trial production and trial operation) to the date when the enterprises terminate production and operation.

This year's "profit making year" should be determined according to the following principles: (1) if the company starts to make profits in that year, it will be the beginning of the profit year, regardless of the actual operating period.

If an enterprise starts business in the middle of the year, and if the profit is actually less than 6 months, the enterprise may choose to calculate the time limit for the exemption or reduction of the enterprise income tax from the next year, but the enterprise shall pay income tax in accordance with the provisions of the tax law.

For example, when a foreign investment enterprise started business in July 1995, with a profit of 500 thousand yuan, it can start to calculate the period of tax reduction and exemption from 1995. If the enterprise chooses to calculate the tax relief period from 1996, 1995 should pay the income tax according to the tax law.

(2) there is a deficit in the initial stage of the business to compensate for the profit tax year.

For example, a foreign invested enterprise started business in 1991, lost 1 million yuan and 3 million yuan in those second and 1 million years respectively, and gained 2 million 900 thousand yuan in 1993. After making up the deficit, it still has an uncompensated deficit of 1 million 200 thousand yuan. In 1994, it made a profit of 3 million 300 thousand yuan. After making up the deficit, it had a profit of 2 million 100 thousand yuan, and the profit making year should be 1994.

In the period of statutory tax reduction and exemption, if the loss occurs in a certain year, the company should continue to calculate the period of tax reduction and exemption. It should not be postponed because of the loss in the middle of the year, and the year of the loss should not be deducted from the statutory tax reduction and exemption period. 3.

For example, a foreign investment enterprise started business in early 1994, that is, profits. The tax reduction period also started in 1994, and it also made profits in 1995. It suffered losses in 1996 and made profits in 1997 and 1999. However, the tax reduction period was still at the end of 1999, including 1999.

Whoever enjoys the above exempted or reduced treatment productive foreign investment enterprises shall report to the local tax authorities the circumstances of their industries, the names of their main products and the period of their operation, and shall not enjoy the above treatment of exemption and exemption without examination and approval.

In accordance with the above provisions, the foreign investment enterprises that have been exempted from or reduced the enterprise income tax in accordance with the above provisions, whose actual operating period is less than 10 years, shall pay the enterprise income tax exemption or reduction except for natural disasters and accidents.

2. foreign invested enterprises engaged in agriculture, forestry and animal husbandry and foreign invested enterprises in undeveloped and remote areas, after the expiration of the above tax exemption and tax reduction treatment, are approved by the tax authorities of the State Council, and can continue to reduce the income tax of 15% to 30% in the next 10 years.

Shantou agricultural development industry Co., Ltd. is a productive foreign invested enterprise engaged in agriculture. Its operation period is 30 years, and it started business in early 1990. It was profitable in that year. After approval by the tax authorities, it was exempted from enterprise income tax in 1990 and 1991, and enterprise income tax was reduced by half in 1992, 1993 and 1994.

In 1994, with the expiration of tax exemption and tax reduction, with the approval of the tax authorities, from 1995 to 2004, 20% of the corporate income tax will be deducted according to the tax payable.

The amount is 960 thousand yuan [i.e. 400 * 30% x (1 - 20%)]. For foreign-invested enterprises engaging in productive and non productive businesses, if the business scope of their business licenses is limited to the productive and non productive businesses, or the business scope limited by the business license is only productive business, but actually it is also engaged in non productive businesses, the time limit for the exemption and reduction tax calculated from the year of the enterprise's profit may be applied in the year when its productive operating income exceeds the 50% of all business income, and the tax exemption and reduction shall be granted if approved by the competent tax authorities. In 1996, the enterprise realized taxable income of 4 million yuan, and the enterprise income tax rate was 30%.

If the business scope of its business license is limited, there is no productive business, and no matter how large the proportion of productive business in its actual business activities, the above exemption and reduction treatment can not be enjoyed.