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Preferential Corporate Income Tax Policy in Nansha

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Preferential Corporate Income Tax Policy in Nansha

According to the Circular on Preferential Corporate Income Tax Policies in Nansha, Guangzhou issued by the Ministry of Finance and State Tax Administration of the PRC (Caishui [2022] No.40), enterprises registered in the initial launch areas (i.e., Nansha Bay, Qingsheng Hub Cluster, Nansha Hub Cluster) of Nansha and engaged in substantial business in encouraged industries shall be subject to a reduced corporate income tax (CIT) rate of 15%. A qualified enterprise shall meet both of the following conditions:

(1)	The enterprise is engaged in encouraged industries listed in the Preferential Corporate Income Tax Catalogue of Nansha, Guangzhou (2022 Edition), and its revenue derived from the encouraged industries accounts for 60% or above of its total revenue; and
(2)	The effective management of the enterprise is physically in the initial launch areas of Nansha and exercise substantial and overall management and control on business, personnel, accounting, and properties, etc. of the enterprise.

Meanwhile, according to the Public Notice Regarding Matters Related to Substantial Operations of Enterprises in Encouraged Industries in the Guangzhou Nansha Pilot Zone jointly released by the State Taxation Administration of Nansha District and other authorities on 31 May 2023, the key criteria for substantial operation are as follows:

Carrying out manufacturing/business operations in the pilot areas of Nansha

(1)	The enterprise shall have its fixed and main manufacturing/business operation premises with necessary manufacturing/business equipment and facilities physically in the pilot areas of Nansha; or shall have its effective management in the pilot areas of Nansha that manages and controls a full-scale manufacturing/business operations; and
(2)	The enterprise shall conclude contracts in its own name.

With sufficient staffs in the pilot areas of Nansha

(1)	The enterprise shall have sufficient staffs working in the pilot areas of Nansha.
(2)	Salaries and wages of the staffs shall be paid via bank accounts set up in the pilot areas of Nansha.
(3)	Considering its actual business scale, the enterprise shall have 3 to 30 staffs working in the pilot areas of Nansha and contribute to social securities in the pilot areas of Nansha for at least six months in a year.

With accounting records maintained in the pilot areas of Nansha

The enterprise shall maintain the accounting ledgers, accounting books and financial statements, etc. in the pilot areas of Nansha and the basic deposit account and settlement accounts for major business activities shall be opened with commercial banks in the pilot areas of Nansha.
With assets situated in the pilot areas of Nansha

The enterprise shall have necessary assets that it has title or the use right physically in use in the pilot areas of Nansha, or its effective management that manages and controls the assets in a full-scale in the pilot areas of Nansha that match with its manufacturing/business scale.

Any enterprise falling into either one of the following circumstances shall be considered disqualified for substantial operation:

(1)	An enterprise without manufacturing/operational functions only undertakes financial settlements, tax filings, invoicing functions for businesses outside the pilot areas of Nansha; or
(2)	An enterprise’s registered address was found inconsistent with its actual business operation address and contact person of the enterprise cannot be reached or failed to provide its actual business address after accessed by the government authorities.

KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.

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Preferential Corporate Income Tax Policy in Nansha

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