SETTING UP BUSINESS IN
CHINA
2026
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General Aspects China is situated in East Asia, bordered on its east by the Pacific Ocean. The total area of the country is 9.6 million square kilometers, and the population is 1.4 billion. China is a country with an ancient civilization and a recorded history of over 4,000 years. The largest developing country in the world, China enjoys social stability and a steadily developing economy. 56 ethnic nationalities live in China, all enjoying equal rights guaranteed by the Constitution and the legal system. China is divided into 23 provinces, five autonomous regions, four municipalities under the direct jurisdiction of the Central Government, and two special administrative regions. The Capital of the People’s Republic of China is Beijing.
Legal Forms of Business Entities Legal form
Feature
Sole Proprietorship
A type of company that has been legally set up inside China and is invested by a PRC natural person. The investor owns the company and all its properties. The owner of the company is liable for an unlimited capacity for its debts to the extent of his personal property.
Partnership
A partnership enterprise does not constitute a separate legal entity from its partners. The partnership agreement is the enterprise constitution that sets forth how the business is managed. The partnership is required to have a minimum of two and a maximum of 50 partners. The partners are divided into two categories: general partners and limited partners. General partners are unlimitedly and severally liable for the indebtedness of the partnership, while limited partners are only liable for the extent of capital contribution they had subscribed to. Contributions to the capital can be made through money, property, intellectual property, or in kind. One or multiple general partners manage the business of the partnership. Partners receive an interest in the profits and losses of the partnership and are taxed directly instead of the partnership.
The amended Partnership Law, came into effect 1st June 2007. Administrative measures for the establishment of partnership enterprises in China by Foreign Enterprises or Individuals, which came into 1st March 2010, allow the establishment of Foreigninvested Partnerships.
Representative Offices (RO)
Foreign companies that want to increase their market presence or conduct market research in China can set up a RO. A RO is not a separate legal entity but an extension of the foreign parent company. It cannot engage in any business activities that generate profit and cannot collect payments or issue invoices, buy property or import production equipment. Bank Account Opening & Registration Timeline Foreign-invested entities, whether establishing a Wholly Foreign-Owned Enterprise (WFOE/LLC) or a Representative Office (RO), must complete company and bank account registrations before beginning operations. As of 2025, the practical processing time for opening the company’s RMB basic bank account and completing the related registration procedures is approximately about 2 months, assuming no special industry licenses are required. This timeline reflects enhanced compliance reviews and stricter anti–money laundering (AML) checks implemented by Chinese banks in recent years.
Administrative regulations on registration of resident Representative offices of Foreign Enterprises which came into effect on 1st March, 2011, regulate the establishment of offices and their business activities. ROs can employ up to four foreign representatives including a chief representative. Since ROs are not separate legal entities, their liabilities are extended to their parent companies. To be eligible to establish a RO, the parent company must have been in existence for at least two years. Note: in recent years, the Chinese authorities have advised against the registration of ROs by foreign investors, asking them instead to incorporate Limited liability companies. Even though it is still completely legal to register a RO, in certain cities foreign investors might be blocked from registering one and be advised by local authorities to register a Limited liability company.
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Remarks
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Below are forms of Limited Companies: Equity Joint Venture (EJV)
A limited liability Chinese legal entity formed by one or more Chinese parties and one or more foreign parties under the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures. Generally, at least 25% of the joint venture’s shares should be held by foreign investor(s). The joint venture will be managed by a board of directors appointed by each side after getting the agreement. Investors in an equity joint venture share profits and losses strictly in accordance with their respective contributions to the registered capital of the venture
Co-Operative Joint Venture (CJV)
Sometimes referred to as a contractual joint venture. The establishment of a cooperative joint venture is governed by the Law of the People’s Republic of China on Chinese-Foreign Co-operative Joint Ventures. It may be formed as a legal person with limited liability, or an entity similar to a partnership. The Chinese and foreign parties shall share earnings or products, undertake risks and losses in accordance with the agreements prescribed in the contractual joint venture contract
Limited Liability Company (LLC) Formerly known as Wholly Foreign Owned Enterprise (WFOE)
A limited liability company, also known as a limited company, is the most commonly used type of company in China and represents a separate legal entity from its investors. If set up by or with foreign investors, they need to follow the general Company Law according to the new Foreign Investment Law, which took effect on 1 January 2020. The shareholders’ liability is limited to the amount of capital they have subscribed to the company, and therefore, if the company becomes insolvent, the shareholders are only liable for the deficit between subscribed and contributed capital. In mid-2025, China released an updated version of the Company Law, introducing a unified rule applicable to both domestic and foreign‑invested limited liability companies. Under this reform, all shareholders must fully contribute their subscribed registered capital within a maximum of five (5) years from the company’s establishment date.
When registering a company in China, foreign investors need to follow the requirements established in the new Foreign Investment Law, which took effect in January 2020. Following the promulgation of the new law, depending on the foreign shareholding ratio in an LLC or a company limited by shares, it should be noted that it is still allowed to refer to a wholly foreign-owned enterprise (WFOE) or a Sino-foreign joint venture enterprise in the economic sense of the word. However, a WFOE or JV (equity joint venture (EJV) or contractual joint venture (CJV)) would no longer exist as separate legal forms. All foreign-invested enterprises (FIEs) in China will take the legal form of either a company (LLC or company listed by shares) or a partnership. Furthermore, in order to close the gap between foreign and local investors, from the effectiveness of the FIL, all foreign-invested enterprises (the FIEs), be it joint ventures or wholly foreign-owned entities, will be governed by the Company Law of the PRC (the Company Law) if they are incorporated, or other relevant laws such as the Partnership Law, if they are unincorporated, in the same way as all Chinese domestic entities. Note: recently the Chinese government published the foreign investment law, which became effective on January 1st, 2020. The consequences of this law dictate, among others, the end of WFOE and JV laws: The three special laws currently regulating foreign investments (the WFOE, Equity JV, and Contractual JV laws) will be abolished. All firms (foreign and local) will be governed exclusively by China’s Company Law and Partnership Law. Therefore, the reference to EJV CJV and WFOE should be taken as not a legal concept, but as a colloquial, customary reference.
This replaces the previous system, where capital contribution deadlines were primarily contract-based and could extend significantly longer. The new rule applies to newly incorporated companies, while existing companies may be required to adjust their contribution schedules during the transition period depending on local authority implementation requirements.
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Organizational Questions Subject
Information
Restriction on amounts The person leaving China with a cash equivalent amount of USD 5,000 or less (including USD 5,000), need not apply for approval before leaving China. that can be taken out The person leaving China with the cash equivalent amount ranging from USD 5,000 to USD 10,000 (including USD 10,000) should apply to the bank for of the country the relevant approval. The person leaving China with a cash equivalent amount of more than USD 10,000 should apply to the competent SAFE for the relevant approval. Local Borrowing
There is no restriction for foreign-invested companies to borrow money from banks located in China. However, the foreign loan is limited to the difference between the total investment and registered capital. FIE’s registered capital should be contributed in accordance with the time schedule specified by the relevant authority.
Visa Information
Expatriates based in Mainland China can apply for Visas through their local Public Security Bureau (PSB). For individuals based outside of Mainland China, Visa information can be obtained from the Chinese Embassy or Chinese Consulate. Visa-Free Entry (New Policy) Before applying for a visa, travelers should check if they qualify for visa-free entry. China has extended its unilateral visa-free policy until December 31, 2026, for citizens of 45 countries (including France, Germany, Italy, Japan, Australia, and South Korea). •
Eligible Purposes: Business, tourism, visiting friends/relatives, exchange, and transit.
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Duration: A stay of no more than 30 days.
•
Note: Travelers from eligible countries engaging in these activities for 30 days or less do not need to apply for a visa.
Standard Visa Application Channels For those not eligible for visa-free entry, or for stays exceeding the visa-free duration: •
Outside Mainland China: Visa information and applications are handled by the local Chinese Embassy or Consulate.
•
Inside Mainland China: Expatriates based in Mainland China can apply for visa extensions or changes through their local Public Security Bureau (PSB).
Resident Visa is issued to an expatriate, who comes to China for employment and his accompanying family members. A resident visa normally is valid for one year or two years and issued for legal rep. of those enterprises with good standing. Business Visa (F/M Visa) is issued to an expatriate, who is invited to China for a visit, an investigation, a lecture, to do business, scientific-technological and culture exchanges, short-term advanced studies or internship for a period of no more than six months. Zero/single/double-entry visa or multi-entry visa can be issued with a validity under six months (180 days) Student Visa (X1/X2 Visa) is issued to an expatriate, who comes to China for study, advanced studies or intern practice for more than six months. If the expatriate, who comes to China to study or intern practice for a period of less than six months shall apply for an X2 visa. Term of validity for student visa is granted in accordance with the duration of study in China. The final decision is determined by the school in case of a discrepancy between the Admission Confirmation and an earlier school letter. Tourist Visa (L Visa) is required for citizens of non-exempt countries, or eligible citizens planning to stay longer than 30 days. This is issued to an expatriate, who comes to China for sightseeing or visiting family members or for other personal affairs.
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Employment Topic
Feature
Labour Market
China is the biggest developing country with the largest population in the world. Workforce Demographics •
Total Labour Force: Approximately 774 million (2024 data), offering a vast talent pool for businesses.
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Working-Age Population: The core workforce (ages 16–59) stands at 851 million. By international standards (ages 15–64), this figure is nearly 968.5 million, representing 69% of the total population.
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Migrant Workers: Critical to the manufacturing and service sectors, the migrant workforce grew slightly to reach 301 million in 2025.
2025 Performance Indicators •
Job Creation: From Jan–Nov 2025, China created 12.1 million new urban jobs, fulfilling the annual target ahead of schedule.
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Unemployment Rate: The average urban unemployment rate held steady at 5.2%, well within the government target of 5.5%.
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Core Stability: The rate for the prime working-age group (30–59) averaged a low 4.0%, providing a solid foundation for the market.
Labour Costs While costs are rising in coastal hubs, China remains competitive compared to developed economies in North America, Europe, and Japan. Significant regional variations exist, with inland provinces continuing to offer distinct cost advantages. Employment permit
Expatriates working in China should apply for employment permit with labour bureau before applying for resident visa issued by The Exit-Entry Administration of the Ministry of Public Security.
Labour Regulations
The Standing Committee of the National People’s Congress passed the new Labour Contract Law (“Labor Contract Law”) on 29 June 2007, which became effective on 1 January 2008 and the amendment of the ‘Labour Contract Law’ was effective on 1st July 2013. The Labour Contract Laws applies on all enterprises, private and non- economic entities in China. Under the Labour Contract Law, written labour contracts are mandatory required documents to establish labour relationships. There are four types of labour contracts, including: •
Contracts with fixed period of service;
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Contracts with unfixed period of service;
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Contracts where the period of service equal to the period required to complete the tasks; and
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Collective contract.
The Labour Contract Law contains details on compulsory limits on probation period under different circumstances. It also pro- vides details on situations where the employers and employees may terminate the contracts and the relevant compensations.
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Social Security System
The Social Security System includes social insurance, social welfare, the special care and placement system, social relief and housing fund services. The social insurance is the core of the system. It is a mandatory and non-profit system, which administered by Ministry of Human Resources and Social Security. All enterprises must register with the local social insurance institution, participate in social insurance schemes and pay social insurance premiums monthly. The portion of premium payable by individual workers will be withheld and deducted from their salary and paid to the relevant authorities by the enterprises. Employers and employees must participate in five social insurance schemes, including: unemployment insurance, old age pensions, medical treatment, work-related injuries and maternity care. The premiums for pension, medical and unemployment insurance are jointly contributed by the enterprise and the employee; while the premiums for work-related injuries and maternity care insurance are the sole responsibilities of the enterprise. Apart from these mandatory subsidies, employers must provide living subsidies and medical treatment allowances for all PRC employees. These schemes must be paid out of an employee bonus and welfare fund, which is created from the employer’s after-tax profits.
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Taxation Direct Tax
Feature
Remarks
Individual Income Tax (IIT)
Individual Income Tax Law (IIT Law) provides that the IIT shall be levied on 1. If a double taxation agreement applies, the applicable period is 183 days. the following income: 2. where he/she leaves China for more than 30 days in any year in which he/she resides in China for 183 days or more cumulatively, the 1. Wages and salary; computation of consecutive number of years for which he/she resides 2. Compensation for personal service; in China for 183 days or more cumulatively shall restart. 3. Income from authorship; 4. Royalties; Special formula is adopted for calculating IIT liabilities for senior 5. Income from operation; management working in China. 6. interest, dividends; 7. Income from lease of property; An individual will be required to file IIT returns with the local tax office and 8. Income from transfer of property; pay tax on a monthly basis. Generally speaking, the employer should act 9. Contingent income. as the withholding agent for the employees within fifteen days after each IIT is levied on the first 4 categories of income (i.e. “comprehensive income”) month. at the progressive rates from3% to 45%. Starting from 1st October 2018, a monthly standard deduction of CNY5,000 for both local Chinese staff and expatriates is applied, besides, local Chinese is allowed an additional special deduction in calculating the amount of IIT payable on wages and salaries. For expatriates, they can choose to enjoy either additional special deduction or tax-deductible fringe benefits. The fringe benefits policy has been extended to Dec 31, 2027. Where a non-PRC domiciled individual working in the PRC receives wages and salaries from a foreign employer and the payment is not ultimately borne by an establishment in the PRC, his IIT exposure depends on the length of residence in the PRC in a year as follows:
Stay in the PRC
Table Income
Less than 90 days/183 days (Note1)
income sourced in China, except income paid by his/her overseas employer and not borne by the said employer’s organization or workplace in China.
More than 183 days in a tax year for less than 6 consecutive years (Note 2)
Global salaries and wages, except income related to services outside the PRC and borne and paid by non-PRC entities
More than 183 days in a tax year for more than 6 consecutive years(note 2)
Global income
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Tax
Feature
Corporate Income Tax (CIT)
China introduced the new Corporate Income Tax Law (CIT Law) on 16th March 2007. Effective from 1st January 2008, all domestic enterprises and Foreign Investment Enterprises (FIE) including EJV, CJV and WFOE, are subject to Corporate Income Tax (CIT) at a unified tax rate of 25%. Enterprises that enjoy a lower tax rate of 15%, such as those established in Special Economic Zones or Areas, provided that the enterprise is engaged in projects that fall within the catalogue for tax preferential treatment of each zone or area.
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A foreign enterprise (FE) without an establishment in the PRC is subject to withholding tax at a rate of 10% on passive income (such as dividend, royalty, rental income, etc.) derived from the PRC. The CIT law introduced a tax resident enterprise (TRE) concept where a FE with the place of effective management in China shall be considered as a TRE and subject to income tax in China on its worldwide income. Furthermore, a non-TRE with an establishment or place in China shall be subject to China income tax on income derived by that establishment or place from sources within China and on income derived from sources outside China, which is effectively connected with such establishment or place. Tax losses can be carried forward for 5 years but cannot be carried back. For enterprises which are seriously affected by COVID-19, the losses of 2020 can be carried forward for 8 years. The calendar year is used as tax year. An enterprise may adopt its own accounting date with the approval of the tax bureau. Accounts are to be prepared in Chinese or in Chinese with a recognised foreign language. FIEs and FEs with establishments in the PRC should file CIT returns quarterly and make advanced payment of tax within fifteen days from the end of each quarter. An annual return together with audited accounts should be filed within five months after the tax year. Reduction of CIT Qualified micro and thin-profit enterprises can enjoy 5% effective corporate income tax rate if the annual taxable income is less than CNY 3,000,000 (from Jan 1 2023 to Dec 31 2027). The qualification criteria for micro and thin-profit enterprises are: average total assets <CNY 50 million, average headcount of employees < 300) and annual taxable income < CNY 3 million. Qualified “New & high technology enterprise” can enjoy 15% corporate tax rate. And the losses carry-over and compensation period extended to 10 years. The recognition for “new & high technology enterprise” will be performed by special authority, and the procedure will be stricter. Qualified R&D expenditure can apply for an additional 100% super deduction before tax.
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Donation expenditures for charitable activities and public welfare, which are less than 12% of the total annual profits, are allowed to be deducted, and the excess part is allowed to be deducted within three years. Disabled employees salary expenditure can apply for 100% super deduction. The portion of staff training expenses incurred by an enterprise which does not exceed 8% of the total wage amount is allowed to be deducted when tax; the excess is allowed to be carried forward to subsequent tax years for deduction. The insurance premiums paid by enterprises for employer liability insurance, public liability insurance or any other liability insurance as required are allowed to be deducted for CIT purpose. New equipment and appliances purchased by enterprises from January 1, 2018 whose unit value does not exceed CNY 5 million, shall be allowed to be recorded as the cost of current period and deducted in full when tax, and such costs shall no longer be depreciated within certain years. When a venture capital enterprise invests in the shareholdings of private small or medium-sized new and high-tech enterprises for more than two years, 70% of the investment amount may be deducted from taxable income in the year that the two-year holding is completed. Unutilized deductions may be carried forward to future tax years. Some incentives Catalogue of Encouraged Industries The 2025 version of the “Catalogue of Encouraged Industries for Foreign Investment” was released and will take effect on February 1, 2026. It adds new high-tech and service industry entries. Tax incentives are provided to enterprises engaged in industries that are encouraged by the State (such as: agricultural, forestry, animal husbandry and fishery industries). Most of those industries are subject to full tax exemption, several others are allowed a 50% reduction on the normal 25% tax rate. For qualifying major State-supported public infrastructure projects, qualifying environmental protection projects, water or energy saving projects, project involving clean development mechanism and qualified energy-saving service enterprises, will be granted from the first revenue producing year a threeyear exemption followed by a three-year 50% reduction from the normal 25% tax rate. The qualified transfers of technology by resident enterprises shall be exempted from income tax with a cap of CNY 5 million for income earned in a taxable year from the transfer of ownership of technologies and any excess shall be subject to a 50% reduction from the normal 25% tax rate. Resource comprehensive utilization enterprises shall only file 90% of the qualified products revenue for taxable calculation. For environmental protection, water or energy saving and safety production, 10% of the equipment investment amount may be deducted from taxable income in the year. Unutilized deductions may be carried forward for up to five tax years.
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Payroll Tax
When an employee receives salary from an employer, the income is subject For details, please refer to Individual Income Tax. to Individual Income Tax in China.
Fringe Benefit Tax
When an employee receives benefits from an employer, the taxable benefits For details, please refer to Individual Income Tax. are subject to Individual Income Tax in China.
Capital Gains Tax
For an enterprise, the earnings on the transfer of shares or equity shall be subject to CIT or withholding tax in China. If an enterprise sells real estate in China, it would be subject to CIT and land appreciation tax
Indirect Tax
Feature
VAT
The new Value-Added Tax (VAT) Law of the People’s Republic of China and its Implementation Regulations took effect on 1 January 2026, replacing the provisional VAT regulations that had been in place since 1993. This legislative upgrade introduces a more comprehensive and modernised VAT framework, with significant changes affecting cross border taxation, input tax management, deemed sales, and compliance requirements for both domestic and foreign invested enterprises.
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The VAT rate structure, unchanged since the 2019 reform, continues to apply under the new law: 1.
13% - Basic rate for sale of products
2.
9% - Transportation, Construction, Basic Telecommunications Services, Rental and Agricultural Products
3.
6% - Modern Service, Life Service, Financial Service
4.
0% - Export (pursuant to tax circulars issued subsequent to the Provisional Regulations. VAT export refund rates for export range from 0% to 16% depending on the specific nature of goods. Thus, VAT on export sale in effect does not apply 0% rate for certain items.)
VAT Payable: VAT payable = Output VAT - Input VAT during the period Output VAT = Taxable income x applicable Tax rate It is noted that not all input VAT paid is deductible or refundable in the determination of the amount of VAT payable. Restrictions remain in place for specific categories of input VAT. Small-Scale Taxpayers Small-scale taxpayers are subject to VAT at a 3% levy rate on their taxable income, without any credit for input VAT. Under the new rules, the distinction between “Commercial Enterprise” and “Industrial Enterprise” is no longer applied. Small-scale taxpayers may be exempt from VAT where their revenue does not exceed: •
CNY 100,000 per month, or
•
CNY 300,000 per quarter
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In addition, the minimum annual sales threshold to qualify as a VAT General Taxpayer remains CNY 5 million. Once this threshold is exceeded, VAT must be calculated under the general taxpayer method from the same period, with no transitional relief . Can consider whether or not to include the new VAT updates: Cross-Border Sourcing and Consumption One of the most important changes involves the sourcing rules for cross-border services. Under the new framework, services provided by overseas suppliers are taxable in China if they are consumed domestically or are directly related to domestic goods, real estate, or natural resources. However, services that are performed entirely overseas and require on‑site delivery remain outside the taxable scope. This shift puts a lot of pressure on businesses to demonstrate where services are consumed. Zero-rated cross-border services now require evidence that they were “completely consumed overseas,” necessitating contract wording and verifiable proof of delivery location to avoid withholding tax liabilities. Mixed Sales and Taxpayer Thresholds The reform introduces clearer guidance on a taxable transaction that involves two or more tax rates or levy rates. When a bundled transaction has an identifiable principal component, that component now determines the VAT rate applied to the entire transaction. To ensure consistent compliance, businesses should review and update, where appropriate, their systems and internal controls. This includes such as ERP classifications, invoicing and tax master data, accounting policies, and contract language, so that the principal element is clearly documented and consistently applied. The small-scale taxpayer threshold in the announcements is set at monthly sales of RMB 100,000 (RMB 300,000 quarterly) for the period 1 January 2026 to 31 December 2027, elevated to a statutory threshold. This differs from a CNY 5 million threshold, which is the original-value ceiling used in the new input VAT rules for long-term assets (i.e., different context). The announcements state that once the small-scale threshold is exceeded the relevant general-taxpayer rules apply, so businesses should closely monitor sales and ensure timely system and accounting adjustments. Deductions, Refunds, and Adjustments The new regulations have also standardized the types of supporting documents acceptable for input VAT deductions and strengthened controls on special VAT invoices and customs import VAT certificates, particularly with long-term assets. Export‑oriented businesses will face a narrower compliance window, which means refund claims must now be filed within a strict 36‑month period. Any late claims will now result in a permanent loss of refund eligibility. Additionally, industry‑specific adjustments are already underway. China will cancel photovoltaics (PV) export VAT rebates effective 1 April 2026, and battery‑product rebates will be gradually reduced before being fully eliminated on 1 January 2027.
Consumption Tax
CT is levied on individuals or entities that manufacture or subcontract to process chargeable goods in the PRC or import into the PRC chargeable goods as specified in the PRC Provisional Regulations for Consumption Tax. Chargeable goods include cigarette and tobacco, alcoholic drinks and alcohol, cosmetics, firecrackers and fireworks, product oil, motor vehicle tires, motorcycle, motor car, golf balls and equipment, luxurious watches, yachts, disposable wooden chopsticks and wooden floorboards, precious jewelry, precious jade and stones and jewelry made with gold, silver and gold and silver mixed with alloys, battery and coating material. Rates: 1% -40% depending on the chargeable goods. Export sale is exempt from CT. Some goods are taxed based on their volume, such as yellow spirits and beer.
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Urban Construction Tax and Education Surcharge
Since December 2010, all foreign entities and individuals in China are liable for this new surcharge. The surcharge is calculated based on the turnover tax paid and the rates ranges from 6% - 12%.
Stamp Duty
Documents subject to stamp duty include contracts or documents in the nature of a contract in regard to purchase and sale transactions, contracted processing, survey and design contracts for engineering and construction, contracted construction projects, property leasing, goods transportation, warehousing, loans, property insurance, technical contracts; documents for transfer of property title; business account books; certificates and licenses; and other taxable documents determined by the Ministry of Finance. It needs to be filed monthly since Sep 2022.
During period from January 1, 2023 to December 31, 2027, the qualified micro and small-sized enterprises may enjoy reduced tax rates by a range up to 50%. The “micro and small-sized enterprise” refers to an enterprise not engaged in a restricted or prohibited industry and meeting ALL the three requirements including 1) annual taxable income not exceeding CNY3 million; 2) the number of employees not exceeding 300; and 3) the total assets not exceeding CNY50 million.
During period from January 1, 2023 to December 31, 2027, the qualified micro and small-sized enterprises may enjoy reduced tax rates by a range up to 50%, excluding stamp duty levied on stock trading. The “micro and small-sized enterprise” refers to an enterprise not engaged in a restricted or prohibited industry and meeting ALL the three requirements including 1) annual taxable income not exceeding CNY3 million; 2) the number of employees not exceeding 300; and 3) the total assets not exceeding CNY50 million. Property Tax
In Mainland China, the property tax comprises of Land Appreciation Tax and Urban Real Estate Tax. China is likely to introduce a new property tax on residential housing to cool down real estate prices. As a trial run, the levying of the Real Estate Tax on residential property has been launched in Shanghai and Chongqing since January 2011. The taxable properties are limited to the second or subsequent properties or high-end properties purchased by an individual under the trial program. The rate ranges from 0.4%-0.6% in Shanghai and from 0.5%-1.2% in Chongqing. The timetable to expand this new tax nationwide is not yet decided, as the government bodies, including: People Bank of China, Finance Ministry and State Administration of Taxation are still working out when to implement the tax.
Land Appreciation Tax
Land appreciation tax is levied on units and individuals on incomes derived from the transfer of state-owned land use rights, buildings and their attached facilities, and are assessed at a prescribed tax rate on the basis of the appreciation amount derived by the taxpayer from the transfer of real estate. The tax rate ranges from 30% to 60%. There are specific guidelines setting out the deduction items for calculating land appreciation tax
Urban Real Estate Tax
Generally speaking, real estate owned by foreign invested companies and foreign nationals is taxed at the rate of 1.2% for self-use purposes after making a one-off deduction of 10%-30% of the original value of the property, or at the rate of 12% or 4% for rental income. Urban real estate tax is generally assessed annually and paid in installments. During period from January 1, 2023 to December 31, 2027, the qualified micro and small-sized enterprises may enjoy reduced tax rates by a range up to 50%. The “micro and small-sized enterprise” refers to an enterprise not engaged in a restricted or prohibited industry and meeting ALL the three requirements including 1) annual taxable income not exceeding CNY3 million; 2) the number of employees not exceeding 300; and 3) the total assets not exceeding CNY50 million.
New section about China Reinvestment Policy
A major new policy was introduced in 2025. A new section should be added detailing the 12-measure notice from July 2025, which encourages foreign reinvestment through measures like flexible land use, streamlined approvals (“green channel” for shareholder loans), and a 10% corporate income tax credit on reinvested dividends (effective 2025-2028)
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This guide has been prepared by ACCLIME, an independent member of Antea ACCLIME 17/F Central Towers Tower A 555 Langao Road Putuo, Shanghai, 200333 Tel.: 21 6389 8288 c.marquis@acclime.com https://china.acclime.com/
SETTING UP BUSINESS IN
CHINA
2026
Antea members in China: HONG KONG Contact partner: Christophe Marquis Tel.: +852 2151 2260 Mail: c.marquis@acclime.com Web: www.china.acclime.com
Mallorca, 260 àtic 08008 – Barcelona Tel.: + 34 93 215 59 89 Fax: + 34 93 487 28 76 Email: info@antea-int.com www.antea-int.com
SHANGHAI Contact partner: Christophe Marquis Tel.: +86 21 6173 8270 Mail: c.marquis@acclime.com Web: www.china.acclime.com
This publication is intended as general guide only. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied on as a substitute for such an advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, not Antea Alliance of Independent Firms neither its members accepts no responsibility for any errors or omission it may contain whether caused by negligence or otherwise, or forany losses, however caused, sustained by any person that relies upon it. © 2026 ANTEA