ANNOUNCEMENT 24 Jun 2011In June 2011, the government of China announced a targeted tax change.
NUMBER OF INTERVENTIONS
On 24 June 2011, the Chinese Ministry of Finance (MOF) and State Administration of Taxation (SAT) jointly released the Notice of Income Tax Incentives for Newly-established Enterprises in Distressed Areas of Xinjiang (Notice, CaiShui'2011' NO.53), with the purpose of promoting the leap-forward development and lasting political stability of Xinjiang.
Newly established enterprises (including enterprises with foreign investment, such as joint venture companies, wholly foreign owned enterprises) in Xinjiang Uyghur Autonomous Region distressed areas will enjoy favorable taxation treatment. Distressed areas in Xinjiang shall include three prefectures (Hetian) in the southern part of Xinjiang, other key counties and border counties of national poverty alleviation and development. Favorable taxation treatments are listed as follows:
l From 1 January 2010 to 31 December 2020, an enterprise which is newly established in distressed areas of Xinjiang belongs to the scope in the "Catalogue of Enterprise Income Tax Incentives for Industries Particularly Encouraged by Distressed Areas of Xinjiang for Development", from the first taxation year in which manufacturing or business operational revenue is earned, the said enterprise will enjoy two years' exemption period for income taxation.
l From the third year to the fifth year, income taxation rate on said enterprises will be at 12.5% percent, which is a 50% reduction of income taxation rate in accordance with China Enterprises Income Taxation Law.