China has correspondingly
formulated a series of laws, regulations, rules and measures,
formed a whole set of more complete system of laws and regulations,
and effectively protected the legal rights of domestic and
foreign investors. The competitive advantages in resources
of cheap labour and land within China grant a sign of business
Foreign investors may establish enterprises or offices in
China. Foreign investment should be in line with China's industrial
developing policies and concrete requirements of industrial
development of respective regions in China. It should be submitted
for examination and approval before the enterprise is formed.
Investors may establish Foreign Joint Venture, Foreign Cooperative
Venture, Foreign Wholly Owned Enterprise or in the Form of
Compensation Trade, Processing and Assembly on Order and Leasing.
Each has its characteristics, especially in the percentage
of domestic sales rights.
Foreign investors may setup Representative Office (RO) in
the main cities in China for business connection, products
introduction, marketing, technology exchange and consulting
services. However, direct business activities in RO are not
China's foreign exchange receipts and payments come under
the current account and capital account. Capital account covers
foreign exchange receipts and payments in respect of direct
investment, loans of all kinds, securities investment. Strict
control is maintained over the capital account.
for FIEs and Foreigners:-
- Value added Tax (VAT) is levied on the increased value
of commodities at different stages of production or circulation,
or on the added value of commondities.
- Consumption tax (CT) is tax payable on the sales value
or volume of taxable consumer goods sold in China by enterpreises
and individuals engaged in the production, sub-contracted
processing or importation of selected categories (like cigarettes,
alcoholic drinks..) It is levied on consumer goods on top
- Customs duty is levied by Customs on commercial commodities
or articles entering or leaving China's national boundaries
or customs territories.
- Business tax (BT) is levied on the revenue generated
from the provision of taxable services, like construction
& finance ..., and the transfer of intangible assets
and the sale of immovable properties within the territory
- Income tax on FIEs & Foreign Enterprises (FEIT) is
levied on enterprises' taxable income derived from production,
business operations and other sources within the territory
- Individual Income Tax (IIT) is levied on the income derived
from sources both inside and outside China of individuals
who have domicile in China, or through without domicile
have resided for one year or more in China; and on the income
derived from sources within China of individuals not domiciled
or resident in China, or individuals not domiciled but have
resided in China for less than one year.