1993.07.14
STATE BUREAU OF TAXATION
CIRCULAR ON THE QUESTION CONCERNING THE APPLICABLE TAX RATE AND
DEDUCTION OF CALCULATED TAX AMOUNT RELATED TO INCOME GAINED BY AN
ENTERPRISE WITH FOREIGN INVESTMENT FROM OUTSIDE CHINA
(State Administration of Taxation: 14 July 1993 Coded Guo Shui Fa [1993]
No. 039)
To the tax bureaus of various provinces, autonomous regions and
municipalities, the tax bureaus of various cities with independent
planning and sub-bureaus of the Offshore Oil Tax Administration:
In accordance with the related stipulations of the Income Tax Law on
enterprise with foreign investment and Foreign Enterprises as well as
the Detailed Rules for Implementation (hereinafter referred to as the
Tax Law and Detailed Rules), we hereby clarify the question concerning
the applicable tax rate related to the income gained by a enterprise
with foreign investment from outside China and the question concerning
calculation of deduction of the income tax already paid outside China:
I. In accordance with Article 71 of the Detailed Rules, the reduced tax
rate as stipulated in the Tax Law is applicable only to the income
gained by a enterprise with foreign investment from production and
operation carried out in appropriate districts. Therefore, with regard
to the income gained by a enterprise with foreign investment from
outside China, enterprise income tax and 1 ocal income tax shall be
calculated and levied without exception in accordance with the
stipulations of Article 5 of the Tax Law.
II. As regards the item which states "the total amount of payable tax
calculated in accordance with the Tax Law on incomes gained from inside
and outside China" as set in the formula for calculating the quota of
overseas tax payment to be deducted as listed in Article 84 of the
Detailed Rules, the total amount of income gained from inside and
outside China shall be calculated in accordance with the enterprise
income tax rate and local income tax rate as stipulated in Article 5 of
the Tax Law.
III. This Circular goes into effect from the day of receipt of the
document.
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