Article 19 If a foreign enterprise has not established an institution or place in China, but has obtained profits, interest, rent, royalties and other income from China, or has established an institution or place, but the above income is not actually related to its institution or place, it shall pay 20% income tax.
For income tax paid in accordance with the provisions of the preceding paragraph, the actual beneficiary shall be the taxpayer and the payer shall be the withholding agent. The tax shall be withheld by the payer from each payment. The tax withheld by the withholding agent each time shall be turned over to the state treasury within five days, and the withholding income tax report form shall be submitted to the local tax authorities.
Income tax shall be exempted or reduced for the following income:
(1) Profits made by foreign investors from foreign-invested enterprises shall be exempted from income tax;
(2) Interest income from loans made by international financial organizations to the China government and the National Bank of China shall be exempted from income tax;
(3) Interest income from loans made by foreign banks to the National Bank of China at preferential interest rates shall be exempted from income tax;
(4) Royalty fees obtained by providing proprietary technology for scientific research, energy development, transportation development, agriculture, forestry and animal husbandry production and the development of important technologies may be subject to income tax at a reduced rate of10% with the approval of the tax authorities in the State Council, and those with advanced technology or favorable conditions may be exempted from income tax.
In addition to the provisions of this article, if it is necessary to give preferential treatment to profits, interests, rents, royalties and other income, it shall be stipulated by the State Council.
Article 66 The scope of royalty reduction and exemption from income tax as stipulated in Item (4) of Paragraph 3 of Article 19 of the Tax Law is as follows:
1. royalties from providing the following proprietary technologies in the development of agriculture, forestry, animal husbandry and fishery production:
1. Techniques for improving soil and grassland, developing barren hills and making full use of natural resources;
2. Techniques for cultivating new varieties of animals and plants and producing high-efficiency and low-toxicity pesticides;
3. Scientific production management of agriculture, forestry, animal husbandry and fishery, maintaining ecological balance and enhancing the ability to resist natural disasters.
The second is the royalties collected by academies of science, institutions of higher learning and other scientific research institutions for conducting or cooperating in scientific research, scientific experiments and providing proprietary technology.
Royalties charged for providing proprietary technology in the development of energy and transportation.
Royalties collected from proprietary technology provided in energy conservation and prevention and control of environmental pollution.
Royalties for providing the following proprietary technologies in the development of important scientific and technological fields:
1. Major advanced mechanical and electrical equipment production technology;
2. Nuclear energy technology;
3. Large-scale integrated circuit production technology;
4. Optical integration, microwave semiconductor and microwave integrated circuit production technology and microwave tube manufacturing technology;
5. Manufacturing technology of ultra-high-speed electronic computers and microprocessors;
6. Optical communication technology;
7. Long-distance EHV DC transmission technology;
8 coal liquefaction, gasification and comprehensive utilization technology.
Article 3 Foreign-invested enterprises can enjoy the preferential treatment of paying enterprise income tax at the reduced rate of 15% only after applying and being approved.
Article 4 Enterprises with foreign investment whose projects meet one of the following conditions may enjoy preferential treatment for technology-intensive and knowledge-intensive projects:
(1) Being able to provide advanced manufacturing technology and technology urgently needed in this Municipality, produce new products urgently needed in this Municipality (including new materials, key components and parts) and promote the development and utilization of new energy in this Municipality;
(two) the use of advanced scientific and technological achievements, can greatly improve the output, quality and performance of products, effectively reduce production costs, save energy and materials;
(three) to promote the technical transformation of the industry;
(four) to provide the key technology patents and know-how (including advanced formula) that are urgently needed in this Municipality.
Article 5 Enterprises with foreign investment may submit an application to the competent department (the application shall be uniformly printed by the Municipal Science and Technology Commission), which shall be forwarded to the Municipal Science and Technology Commission after the comments of the competent department. After receiving the application, the Municipal Science and Technology Commission must, within one month, review with the Municipal Foreign Investment Commission, the Municipal Economic Commission and other relevant departments, and the Municipal Science and Technology Commission will issue an audit certificate. Enterprises with foreign investment shall apply to the tax authorities to enjoy the relevant preferential tax treatment on the basis of the audit certificate.
Yes, the power of interpretation lies with government departments.