How corporate tax works in China
China taxes resident enterprises on worldwide income and non-resident firms on China-connected income. The standard enterprise income tax rate is a flat 25% with no local surcharge.
Certified high-tech enterprises, encouraged industries in the western regions and substantive Hainan operations qualify for 15%. Small low-profit firms pay only 5% effective on annual taxable income up to CNY 3 million through 2027.
Payments abroad face 10% withholding on dividends, interest, royalties and capital gains, cut by treaties to 5% or more for qualifying shareholders. Beneficial ownership and residence paperwork decide whether the treaty rate applies.
Tax rates at a glance
- Standard rate
- 25%Resident firms
- High-tech and regional
- 15%
- Small low-profit
- 5%
- Dividend withholding
- 10%
- Treaty dividends
- 5% - 10%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
FoundersHolding companiesRegional operatorsInvestorsCross-border groups
Watch out for
- The 15% high-tech rate needs a real certificate with R and D, staffing and revenue tests. Assuming the rate without the certificate is a common and costly error.
- Treaty withholding is never automatic. Payers must check beneficial ownership and collect residence certificates before applying 5% instead of 10%.
- VAT, consumption tax, stamp duty, land appreciation tax on property deals and social insurance all sit outside corporate tax and can outweigh it.
- Transfer pricing enforcement is active. Related-party services, royalties and financing need contemporaneous documentation.
Frequently asked questions
Does China have corporate tax?
Yes. Enterprise income tax is 25% standard, 15% for certified high-tech and encouraged regional firms, and 5% effective for small low-profit companies.
What withholding applies to dividends paid abroad?
Domestic law withholds 10%, reduced by treaties to 5% or more for qualifying direct shareholders with proper documentation.
Do small companies get relief in China?
Yes. Small low-profit enterprises pay 5% effective on the first CNY 3 million of annual taxable income through 2027.