Taxation of Foreign Enterprises in the People’s Republic of China

Foreign enterprises with an establishment in the PRC and foreign enterprises without establishment in the PRC but which derive income from the PRC are subject to taxes in the PRC. However, foreign enterprises without establishments in the PRC are taxed on a withholding basis. The PRC Interim Regulations for Business Tax effective as of 1 January 1994 and the Detailed Rules for Implementing the PRC Interim Regulations for Business Tax effective as of the same date, the PRC Corporate Income Tax Law (“CIT Law”) and its Implementing Rules effective as of 1 January 2008 and other various notices and circulars concerning the taxation of foreign enterprises issued by the PRC State Administration of Taxation form the legal basis of taxes which are levied on foreign enterprises in the PRC. In addition, the relevant Double Taxation Treaties between the PRC and the country of incorporation of a foreign enterprise apply.

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