Laws of the People's Republic of China

Official Reply of the State Administration of Taxation about the Starting Time of the Implementation of Corporate Income Tax Deduction and Exemption for Newly Founded Enterprises

Guo Shui Han [2007] No.365

The State Taxation Bureau of Jiangsu Province:

We have received your Request for Instructions about the Starting Time of the Implementation of Corporate Income Tax Deduction and Exemption for Newly Founded Enterprises (Su Guo Shui Fa [2007] No.16). Upon study, we hereby render a reply as follows:

It is provided in Article 30 of the Notice of the State Administration of Taxation on Printing and Distributing the Measures for the Administration of Tax Deduction and Exemption (for Trial Implementation) (Guo Shui Fa [2005] No. 129) that: "The present Measures shall enter into force as of October 1, 2005. Where there is any previous provision conflicting with the present Measures, the latter shall prevail.", and Paragraph 2 of Article 15 of the Appendix provides that: "The production and operation day, as the starting time for the implementation of tax deduction and exemption for a newly founded enterprise, shall be the day when the related taxpayer gains its first income." The two provisions may only be applicable to the enterprises set up after October 1, 2005. The judgment on whether a taxpayer may enjoy the preferential policy on tax deduction and exemption for newly founded enterprises shall be based on the time of its establishment instead of the time when the application for tax deduction and exemption is made. As regards an enterprise set up prior to October 1, 2005 and gains the first income after October 1, 2005, the deducted or exempted taxes shall be calculated subject to the provision of the Official Reply of the State Administration of Taxation about Standards for the Implementation of Income Tax Preferences for Newly Founded Enterprises (Guo Shui Han [2003] No.1239).

The State Administration of Taxation

March 27th, 2007