Legal basis: Enterprise Income Tax Law of People's Republic of China (PRC).
Article 1 Within the territory of People's Republic of China (PRC), enterprises and other income-earning organizations (hereinafter referred to as enterprises) are taxpayers of enterprise income tax and shall pay enterprise income tax in accordance with the provisions of this Law.
This law is not applicable to sole proprietorship enterprises and partnership enterprises.
Article 2 Enterprises are divided into resident enterprises and non-resident enterprises.
Resident enterprises mentioned in this Law refer to enterprises established in China according to law, or enterprises established in accordance with the laws of foreign countries (regions) but with actual management institutions in China.
The term "non-resident enterprise" as mentioned in this Law refers to an enterprise established in accordance with the laws of a foreign country (region). Its actual management institution is not in China, but it has institutions and places in China, or it has no institutions and places in China, but it has income from China.
Article 3 A resident enterprise shall pay enterprise income tax on its income from sources inside and outside China.
Where a non-resident enterprise establishes an institution or place in China, it shall pay enterprise income tax on the income obtained by its institution or place from China and the income generated outside China but actually related to its institution or place.
If a non-resident enterprise has no institution or place in China, or if it has an institution or place, but its income has no actual connection with its institution or place, it shall pay enterprise income tax on its income originating in China.
Article 4 The enterprise income tax rate is 25%. The tax rate applicable to non-resident enterprises obtaining the income specified in the third paragraph of Article 3 of this Law is 20%.