The Notice on Guidelines for Preferential Corporate Income Tax in Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (hereafter referred to as “Notice”) is a joint publication of the Shenzhen Local Administration of Taxation and the State Administration of Taxation in Shenzhen, in accordance with the Notice by the Ministry of Finance State Administration of Taxation on the Preferential Corporate Income Tax Policy and Tax Directory of Guangdong Hengqin, on Fujian Pingtan Comprehensive Experimental Zone, and on Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone.
The publication seeks to help in the implementation of preferential corporate income tax rates in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, clarify procedures for application, streamline tax-collection services and to set guidelines for management procedures.
The Notice covers six aspects of regulation. First, policy: It seeks to implement a 15 per cent tax rate reduction in corporate income tax rates for enterprises that fit the criteria of Qianhai favoured enterprises.
Second, areas of implementation: Enterprises must fulfil a number of criteria to be eligible for preferential corporate income tax rates. They must pay taxes to Qianhai, be located in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, and manage core businesses that fulfil the criteria of those listed in the Directory of Preferential Corporate Income Tax Rates for Enterprises in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (henceforth “Directory”). These core businesses should also account for at least 70 per cent of their total revenue.
Third, procedures for declaration: When calculating quarterly and annual income taxes for their enterprises, tax-paying entities in Qianhai should voluntarily calculate and fill in the corresponding monetary amount of tax rebates that their enterprise should receive.
Fourth, managing preferential policy records: The management of preferential corporate income tax declaration records for Qianhai enterprises follow the principles of voluntary declaration. When calculating quarterly and annual income taxes, enterprises should indicate in the relevant fields where they are eligible for tax rebates when applying for them. This will serve as a complete filing record of the application, and the taxpayer should keep a copy of the information in the application for his own reference.
Key information required includes the following:
1. Form for annual declaration of corporate income tax
2. Annual financial statements
3. Corresponding related services contract for revenue earned from core business
4. Relevant approval documents or operating permits if your industry or business requires qualification of pre-approval
Fifth, clarifying eligibility: Upon closing tax accounts for the financial year, if a tax authority finds it difficult to ascertain if an enterprise’s core business falls under those listed in the Directory, the said authority can request documents issued by Qianhai authorities for verification.
Sixth, effective date: This Notice comes into effect the date it is published, and all relevant tax authorities are in charge of clarifying the Notice.
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