China Tax Overview (2025)

Individual Income Tax:

• Progressive Rates: Individual income tax in China is progressive, meaning higher income brackets are taxed at higher rates.
  The specific tax brackets and rates are subject to change.
  It is essential to consult the official tax authorities for the most current year's rates.
  The rates you mentioned (3% - 45%) may be outdated.
• Income from Business: Income from business operations is also taxed on a progressive scale.
  The specific rates and rules should be verified with the tax authorities.
• Passive Income: Passive income, such as dividends, interest, and royalties, is generally taxed at a standard rate.
  The specific rate should be confirmed with the tax authorities.

Corporate Income Tax:

• Standard Rate: The standard corporate income tax rate for both domestic and foreign companies is generally 25%.
• Preferential Rates: Certain types of companies, such as small and medium-sized enterprises (SMEs) and high-tech enterprises, may be eligible for preferential tax rates.
  The specific criteria and applicable rates should be verified with the tax authorities.
  Regional incentives may also exist.

Capital Gains:

• Individuals: Capital gains realized by individuals are generally taxable.
  The specific tax rate and any applicable exemptions should be confirmed with the tax authorities.
• Corporations: Capital gains realized by corporations are generally included in their taxable income and taxed at the standard corporate income tax rate.
• Foreign Companies: Capital gains earned by foreign companies from sources in China may be subject to withholding tax.
  The specific rate should be verified with the tax authorities. Tax treaties can impact these rates.
• Real Estate: Capital gains from the sale of real estate are subject to specific rules.
  The calculation of the gain and the applicable tax rate should be verified with the tax authorities.

Tax Residency:

• Individuals: Determining tax residency for individuals is complex and depends on various factors, including the length of stay in China, domicile, and habitual residence.
  The "5-year rule" you mentioned may be outdated.
  It is essential to consult the specific tax regulations and seek professional advice to determine residency status.
• Corporations: A corporation is considered a tax resident of China if it is established in China or if its place of effective management is in China.

Reporting and Payment:

• Tax Year: The tax year in China ends on December 31st.
• Filing and Payment: Taxpayers are generally required to file tax returns and make advance payments (monthly or quarterly) throughout the year.
  The specific filing deadlines and payment schedules should be confirmed with the tax authorities.
• Annual Report: An annual tax return must be filed by a specified date.
  The exact deadline should be verified with the tax authorities.
• Exemptions: Certain individuals with low incomes may be exempt from filing an annual tax return.
  The specific income threshold for this exemption should be confirmed with the tax authorities.
• Employer Reporting: Employers are required to withhold individual income tax from employee salaries and remit the tax to the tax authorities.

Deduction at Source (Withholding Tax):

• Dividends: The withholding tax rate on dividends paid to non-residents should be verified with the tax authorities.
  Tax treaties can impact this rate.
• Interest: The withholding tax rate on interest paid to non-residents should be verified with the tax authorities.
  Tax treaties can impact this rate.
• Royalties: The withholding tax rate on royalties paid to non-residents should be verified with the tax authorities.
  Tax treaties can impact this rate.
• Capital Gains: The withholding tax rate on capital gains realized by non-residents should be verified with the tax authorities.
  Tax treaties can impact this rate.
• Technical Service Fees: The withholding tax rate on technical service fees paid to non-residents should be verified with the tax authorities.
  Tax treaties can impact this rate.

Social Security:

• Contributions: Employers and employees are required to make social security contributions.
  The specific rates and contribution bases vary by location and should be confirmed with the local social security authorities.

  Key Updates and Considerations:

  • Tax Laws are Subject to Change: Chinese tax laws and regulations are subject to frequent updates and amendments.
    It is crucial to verify the latest information with a qualified tax advisor or by consulting official Chinese tax sources.
  • Professional Advice: Tax regulations in China can be complex.
    It is highly recommended to seek professional advice from a tax specialist experienced in Chinese tax law for specific guidance on your situation.
  • Tax Treaties: Tax treaties between China and other countries can affect tax rates and withholding tax obligations.