At a glance
- Corporate income tax — standard
- 25%
- CIT — high and new technology enterprise
- 15%
- VAT — goods / transport & property / services
- 13% / 9% / 6%
- Dividend withholding to an overseas parent
- 10%, or 5% under treaty
China’s tax system is not complicated in its rates; it is complicated in its administration. The rates below are the ones that apply to a typical foreign-invested trading, consulting or manufacturing company in 2026. What usually determines the actual burden is not the headline rate but whether an incentive applies and whether the filings are complete enough to defend it.
The rate card#
| Tax | Rate | Applies to |
|---|---|---|
| Corporate income tax | 25% | Standard rate on taxable profit of a resident enterprise |
| Corporate income tax | 15% | High and new technology enterprises, and certain encouraged sectors |
| Corporate income tax | Effective 5% | Small low-profit enterprises within the turnover and headcount thresholds |
| Withholding tax on dividends | 10% | Distributions to a non-resident parent |
| Withholding tax on dividends | 5% | Under a double tax arrangement, subject to beneficial ownership and substance |
| VAT | 13% | Goods, and processing or repair services |
| VAT | 9% | Transport, construction, real estate leasing and sale |
| VAT | 6% | Most services, including consulting and technology services |
| VAT levy rate | 3% | Small-scale taxpayers |
| Individual income tax | 3%–45% | Progressive, on employment income |
| Stamp duty | 0.005%–0.1% | By contract type; 0.025% on capital contributions |
Corporate income tax: where the 10 points are won#
The gap between 25% and 15% is the single largest lever available to a foreign-invested company, and it is applied for rather than granted. High and new technology enterprise status requires owned intellectual property in China, an R&D expense ratio against revenue, and a share of revenue from high-tech products or services. The certificate is valid for three years and is then re-examined.
The second lever is the 100% super deduction for qualifying R&D expenditure, which reduces the taxable base rather than the rate. The third is getting transfer pricing right: a China margin that is defensible under a benchmark study is worth more than an aggressive position that is later adjusted with interest.
Losses do not disappear
Trading losses can be carried forward for five years, or ten for high-tech enterprises. A company that files losses without documentation is not building a tax asset; it is creating a file that will be questioned when it finally turns profitable.
VAT: the rate follows the invoice#
A company’s VAT rate is determined by what it sells, not by its industry. A technology company that also resells hardware issues 6% invoices for services and 13% invoices for goods, and must separate the two in its accounting. Mixing them is one of the most common findings in a first tax review, and the correction is retroactive.
Small-scale taxpayers use a 3% levy rate and cannot deduct input VAT. The choice between small-scale and general taxpayer status is not free: once a company exceeds the annual sales threshold it must register as a general taxpayer, and a company that voluntarily registers generally cannot revert.
Getting money out: dividends and royalties#
Dividends paid to an overseas parent are subject to 10% withholding, reduced to 5% under arrangements such as the mainland–Hong Kong or China–Singapore double tax arrangement. The reduction is not automatic: the recipient must be the beneficial owner, hold the required equity percentage and have substance. Claims are filed with the withholding agent at the time of distribution; retrospective claims are possible but much slower.
Royalties and service fees paid abroad are also subject to withholding, at 10% for royalties and at a rate that depends on whether the payment is characterised as business income under a treaty. Characterisation, not the rate table, is where the planning happens.
The filing calendar that carries penalties#
| Filing | Frequency | Deadline |
|---|---|---|
| VAT and surtaxes | Monthly or quarterly | By the 15th of the following month (or month after quarter end) |
| Corporate income tax prepayment | Quarterly | By the 15th of the month after quarter end |
| Individual income tax withholding | Monthly | By the 15th of the following month |
| Stamp duty | Quarterly or per contract | By the 15th of the month after quarter end |
| Corporate income tax reconciliation | Annually | By 31 May of the following year |
| Statutory audit | Annually | Before the annual CIT filing |
| Market regulator annual report | Annually | 1 January – 30 June |
Late filing carries a fine of up to RMB 10,000 per breach plus a 0.05% daily surcharge on unpaid tax. The larger cost is the credit rating: repeat breaches move the entity onto a lower rating, which slows invoice approvals and refunds for months and can affect the legal representative’s ability to travel.
Frequently asked
Yes. Small low-profit enterprises within the annual taxable income, headcount and asset thresholds pay an effective 5% on taxable income. The thresholds and the policy duration are set annually, so the position should be confirmed for the year in question rather than assumed from an earlier year.
Income sourced from China is subject to withholding, and a foreign company with a dependent agent, a fixed place of business or an installation project in China may create a permanent establishment taxed on attributable profit. The practical question is whether the activity goes beyond preparatory or auxiliary work.
Yes, usually to 5% under a double tax arrangement such as the mainland–Hong Kong or China–Singapore treaty, provided the recipient is the beneficial owner, meets the equity holding requirement and has economic substance. The claim is filed at the time of distribution through the withholding agent.
Yes. Every foreign-invested enterprise must have its annual financial statements audited by a licensed Chinese CPA firm before the corporate income tax reconciliation, which is due by 31 May. Chengli coordinates the audit and prepares the file, but the report is issued and signed by a partner CPA firm.
No. High and new technology enterprise status, R&D super deduction and treaty benefits are all applied for, with documentation, and all can be challenged on review. A company that claims a rate it cannot support is exposed to back tax, late fees and a reduced credit rating.
How to cite this guide
TrustBridge (Beijing Chengli Accounting (Group) Co., Ltd.). “China tax rates for a foreign-invested company in 2026.” en.bcac.com.cn, reviewed 15 November 2026. https://en.bcac.com.cn/guides/china-tax-rates-foreign-invested-enterprise/
