China adopts low tax rate policy for foreign- funded enterprises and implements preferential tax policy for industries and regions under state support of investment.
There are many types of taxes imposed in China, which are:
Enterprise Income Tax/ Business Tax/ Value-added Tax/ Consumption Tax/ Urban real estate Tax/ Stamp Duty/ Deed Tax/ Land value-added Tax/ Vehicle and vessel Purchase Tax/ Vehicle and vessel use Tax/ Resources Tax.
As from 1st January 2008, the rate of tax paid by foreign-invested enterprises (FIEs) and Chinese companies became 25 percent (although it is not yet clear how the income tax rate will be increased over the five-year transitional period from 15 per cent to 25 per cent).
For those FIEs who will lose their current tax holidays under the new law, they will have to consider raising the high/new-tech content of their products and production technology, as well as purchasing capital goods for enhancing environmental protection, water and energy conservation, and production safety in order to try to be qualified for the new tax incentives.