State Administration of Taxation, Implementation Approach on Preferential Treatment for Income Tax of Newly Established Enterprises Official Reply

Issued: November 18 2003

Main contents: The Official Reply clarifies that the date of commencement of business of a newly established enterprise or work unit shall be the date of establishment stated on its business licence. If the date of establishment is after June 30, the enterprise may apply to pay enterprise income tax on the income derived in that year and enjoy regular tax reductions and exemptions starting from the year after. However if the enterprise makes a loss in the next year, the tax it paid for the previous year will not be refunded but the loss may be made up by the income earned in the coming years. The Official Reply also stipulates that enterprise income tax reductions or exemptions shall be subject to examination and approval every year.
Related legislation: State Administration of Taxation, Several Operational Questions Concerning Enterprise Income Tax Circular, Dec 16 1997, CLP 1998 No.2 p12