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Inception date: 28 Apr 2011 | Removal date: open ended

Tax or social insurance relief

On 28 April 2011 the Local Taxation Bureau of Guangdong Province released a series of favorable tax incentives with the purpose of changing its economic growth mode. In accordance with these favorable tax policies, applicable companies in Guangdong may enjoy tax favorable treatments as follows:
1. Favorable tax treatment for innovative and high-tech enterprises

  • High-tech enterprises in Guangdong will enjoy favorable enterprise income taxation of 15% instead of 25%.
  • Product development costs, technology development costs and process development costs will be deducted from high-tech enterprise's income before income taxation.
  • The income from technology transfer, the income from technology development and the income related to technological consulting and technological service will be exempted from business taxation. (Otherwise the business tax ranges from 3% to 20% depending on the industrial category of the company).
  • Depreciation of high-tech enterprises' fixed assets may be deducted from income before income taxation.
  • When high-tech investment companies invest in the key fields of support and encouragement indicated by the Chinese authorities, the invested amount may be deducted from the taxable income before levying income taxation.

 2. Favorable tax treatment for business activities related to saving energy and recycling

  • Enterprises' income from the environmental protection, energy-saving and water-saving will be exempted from enterprise income taxation or levied at a deducted rate.
  • Income from products from complex utilization of resources will be deducted from taxable income amount before levying enterprise income taxation.
  • Investment in purchasing equipment specifically used for environmental protection, energy-saving and water-saving will be deducted from taxable income amount before levying enterprise income taxation.

3. Favorable taxation treatment for innovate enterprises and high-tech enterprises

  • Enterprises engaged in agriculture, forestry, husbandry and fishery projects are entitled to enterprise income taxation exemption or levied at a deducted rate.
  • Enterprises engaged in public infrastructure projects with key support from the nation are entitled to enterprise income taxation exemption or a reduced tax rate.

4. Favorable tax treatment for 'Going Abroad' Enterprise

  • For 'Going Abroad' enterprises, should they encounter any tax-related problems in countries or regions which have signed tax agreements with China (including tax arrangements with Hong Kong and Macau) where taxation not complying with the tax agreements (arrangements) has occurred or may occur, they can submit an application to the State Administration of Taxation (SAT) applying SAT to negotiate with its counterparts to resolve the problem.

5. Local favorable taxation policies

  • Should taxpayers who meet the requirements of the state industrial policy or who are engaged in industries supported by the people's government at prefectural level or above do have difficulties in paying taxation, they may apply for exemption or reduction of property taxation and urban land-using taxation.

All these favorable taxation treatments are applicable to qualified enterprises in Guangdong province only. And in June, local Guangdong taxation bureau released five guidelines for these five favorable taxation policies.



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