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	NOTICE OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE PAYMENT OF CORPORATE INCOME TAXES BY FOREIGN-FUNDED BUSINESS CONSULTING COMPANIES

	(No. 61 [2003] of the State Administration of Taxation promulgated on June 4, 2003 and implemented as of March 1, 2003)


SUBJECT : CORPORATE TAXATION; FOREIGN ENTERPRISES; INCOME FROM COMPANIES SET-UP AND RELATED SERVICES
ISSUING DEPARTMENT : STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 06/04/2003
IMPLEMENT DATE : 03/01/2003
LENGTH : 504 words
TEXT :

In order to encourage foreign companies, enterprises and other economic organizations or individuals (hereinafter referred to foreign investors) to come to China to engage in business start-up, the Ministry of Foreign Trade and Economic Cooperation, the Ministry of Science and Technology, the State Administration for Industry and Commerce, the State Administration of Taxation, the State Administration of Foreign Exchange jointly promulgated the "Measures on the Administration of Foreign-Funded Start-up Enterprises" (Order No. 2 in 2003, hereinafter referred to the "Administrative Provisions" ) in January 2003. With regard to the relevant issues concerning the payment of enterprise income taxes by foreign-funded start-up enterprises (hereinafter referred to start-up enterprises), we hereby clarify them as follows in accordance with the relevant provisions in the "Income Tax Law of the People's Republic of China for Foreign-Funded Enterprises and Foreign Enterprises" (hereinafter referred to the Tax Law) as well as the Detailed Rules for Its Implementation:

I. The start-up enterprises which engage in stock right investment and transfer or provide enterprises with services of start-up management and consulting, etc. in accordance with the relevant provisions shall not belong to the manufacturing enterprises prescribed in Article 72 of the Detailed Rules for the Implementation of the Tax Law, and shall not enjoy the relevant preferential tax treatments of foreign-funded manufacturing enterprises prescribed in the Tax Law.

II. A start-up enterprise which is restructured as a legal person shall be regarded as a taxpayer to uniformly file enterprise income tax returns and pay enterprise income taxes in accordance with the Tax Law.

III. In accordance with Article 7 of the Detailed Rules for the Implementation of the Tax Law, for a start-up enterprise which is restructured as a non-legal person, the enterprise income tax returns may be filed and the enterprise income tax may be paid either by the investing parties respectively or uniformly by the start-up enterprise after being approved by the local taxation organ in accordance with the Tax Law.

If the investing parties to a non-legal person start-up enterprise file the enterprise income tax returns and pay the enterprise income taxes respectively, the foreign investors shall pay their enterprise income taxes as a foreign company with offices or business sites inside the territory of China. However, if the non-legal person start-up enterprise does not establish a start-up management office, and does not directly engage in the business of start-up management or consulting, but grant its routine investment and operation power to a start-up management enterprise or any other start-up enterprise, the foreign party to the former start-up enterprise may pay its enterprise income taxes as a foreign enterprise without any office or business site inside the territory of China.

IV. A "start-up enterprise" mentioned in the present Notice means a foreign-funded enterprise established in light of the requirements and conditions in the "Administrative Provisions", as well as in the statutory procedures to engage in the start-up business, with its enterprise name including the words of "start-up".

V. The present Notice shall come into force on March 1, 2003.