What legislation governs income tax payments by enterprises in China?
Currently domestic enterprises and foreign enterprises (FE) and foreign investment enterprises (FIE) are governed by two different sets of enterprise income tax legislation.
FIEs include Chinese-foreign equity joint ventures, Chinese-foreign contractual joint ventures and wholly foreign-owned enterprises established in China. FIEs include foreign companies, enterprises and other economic organizations which have establishments in China and are engaged in production or business operations or which, although without establishments in China, have income from sources within China.
Establishments refer to management offices, business organizations, representative offices, factories, places where natural resources are exploited, places where contracted projects of construction, installation, assembly and exploration are carried out, places where labour services are provided and business agents.
FIEs are subject to income tax on their worldwide income whereas the FEs is generally liable to income tax in respect of their China-sourced income.