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Fees under technology licensing agreements, intellectual property (IP) right licensing agreement received from a source in the PRC by non-resident foreign corporations or individuals shall be subject to a 10% withholding income tax, a 5% business tax, and a stamp tax of 0.03% on the gross amount. The resident payer has the legal obligation to withhold the tax and pay it over to the tax office. Residents of non-PRC tax treaty countries will be subject to a 20% withholding income tax.

ASSIGMENT OF IP RIGHTS

Non-resident foreign investor receiving income for the Assignment of IP rights in the PRC will be subject to the following type of taxes: -

Type of tax Rate

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Rental income from properties owned by non-resident foreign investors are subject to the following taxes: -

Type of tax Rate

Income tax 20% on rental income
Business tax 5% on rental income
City property tax 18% on rental income

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TAXATION ON REPRESNETATIVE OFFICES
A representative office (RO) achieves the purposes that a foreign investor could establish a PRC presence in a relatively short time period and that the foreign investor is not required to make any commitment to bring in capital either in cash or in kind. Furthermore, the fact that an RO’s approval certificate can be valid for a one-year period provides for an exit option for the foreign investor to test the water.

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To the people’s governments at the provincial level, the people’s governments of autonomous regions and municipalities directly under the State Council, the ministries, and the institutions directly under the State Council

The PRC Enterprise Income Tax Law (referred to as the “EIT Law” hereafter) and the Implementation Regulations of the PRC Enterprise Income Tax Law (referred to as the Implementation Regulations hereafter) will take effect on January 1, 2008. In accordance with Article 57 of the EIT Law, the State Council gives notice on the issues of grandfathering preferential policies under the EIT Law as below:

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It has been a 13-year journey from the preliminary work in 1994 to the passing of thePRC Enterprise Income Tax Law (referred to as “the EIT Law” hereafter) on 16th March 2007, which marked the completion of the unification of two tax systems for  domestically funded and foreign funded enterprises in China. It is a system innovation in the process of building socialism and a harmonized society within the country. To reap the benefits of the new tax system depends very much on its implementation in an effective manner. A few days ago, the State Council announced the long-awaited  Implementation Regulations of the PRC EIT Law (referred to as “the Implementation Regulations” hereafter), which is to come into play with the implementation of the  EIT Law.

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The VAT transformation reform allows the input credit for the purchase of capital equipment to be offset against the output VAT. That will eliminate the double taxation resulting from the adoption of the production-type VAT system, reduce the
tax burden for investment in capital equipment, and a major tax cutting policy without introducing a change in the urrent tax rates. Since it can avoid double tax in the purchase of capital equipment, it will encourage investment, increase the demand in the domestic market, promote technological advancement, adjust the industry structure and the transformation pattern of the economic growth. Currently, the financial tsunami triggered by the sub-prime mortgage crisis has spread to Europe,Asia, and Latin America. Global economic growth rate has obviously been slowed down. Some countries have shown signs of economic recession. The financial crises have adverse impact on the real economy.

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1. Value Added Tax (VAT)
2. General VAT Accounting Treatment
3. Special VAT Accounting Treatment
4. VAT Planning
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