1. Corporate Income Tax
Foreign invested enterprises (Sino-foreign equity joint ventures, Sino-foreign contractual joint ventures and solely foreign invested enterprises) and foreign enterprises which have their organizations established in the Chinese territory and are engaged in production and business are subject to corporate income tax at a rate of 30% and local income tax at a rate of 3%. The manufacturing type foreign invested enterprises in Shanghai pay income tax at a reduced rate of 24%, and those in the economic and technological development zones of Shanghai and Pudong New Area pay income tax at a reduced rate of 15%. A 20% income tax shall be levied on the income derived from profits, interests, rentals, royalties and other sources in China by foreign enterprises which have no establishments in China. The above mentioned enterprises enjoy a reduced income tax rate of 10% in Shanghai (known internationally as withholding tax which is paid in advance by the disburser). The enterprises which provide fund or equipment on favourable terms or which transfer advanced technologies can enjoy further preferential treatment in terms of income tax reduction or exemption upon approval of municipal government.
Income Tax Rate for Foreign Invested Enterprises in Shanghai
Note: 1. The Corporate Income Tax rate of a non-manufacturing enterprise is 30%. The Local Income Tax rate of a non-manufacturing enterprise is 3% .
2. For a foreign invested enterprise engaged in the building of municipal infrastructure with its business period of over 15 years, corporate income tax can be exempted for the first five years after making profits, and the corporate income tax can be reduced by 50% for the second five years.
3. For a foreign invested enterprise carrying on building infrastructure in Pudong New Area, the corporate income tax rate is 15%.

2. Value Added Tax, Consumption Tax and Business Tax

(1) Value Added Tax
Enterprises or individuals who sell commodities, engage in repair and maintenance or import and export business in the territory of China are subject to value added tax in line with Chinese laws. The standard rate for value added tax is 17%, but the rate for a few commodities such as grain, cooking oil, running water, forage, fertilizer, pesticide, and farming machinery is 13%.

(2) Consumption Tax
Product, processing and importation of the following 11 commodities in the territory of China are subject to consumption tax: tabacco, alcoholic drinks or alcohol, cosmetics, skin and hair care products, jewellery, fireworks, gasoline, diesel, automobile tyre, motorcycle and motorcar. Consumption tax is calculated in two ways. One way is to calculate according to quantity (gasoline is RMB 0.20 per litre). The other is to set tax rate according to the price of commodities (the rate for motorcar with its engine cylinder capacity under 2,200ml is 8%).
(3) Business Tax
Enterprises or individuals whose businesses are in the sectors of transportation, post and telecommunication, finance and insurance, construction, art, sports, entertainment, and services, or who transfer incorporeal properties, sell immovables in the territory of China are subject to business tax. Business tax rate is 3% or 5%. But the tax rate for entertainment sector is 10% or 15%.

3. Stamp Tax
Activities involving purchases and sales, processing, contracting, leasing, transportation, storage, loan lending, property insurance, technology contract and property transfer vouchers, business account books and licenses are subject to stamp tax. The minimum rate of a stamp tax is 0.005% and the maximum is 0.1%. For licenses and business account books (not including the account books for stating funds), stamps shall be sticked on to each pieces. The price is RMB 5 a piece.

4. City Real Estate Tax
The tax is levied at an annual rate of 1.2% on the original value of the real estate, after 20% is deducted therefrom. The tax rate is 12% if it is levied on the rental income. The newly constructed houses, which are built by the relevant foreign-invested enterprises themselves or purchased by the relevant foreign-invested enterprises in Pudong New Area and Economic and Technological Development Zones, shall be exempt from real estate tax for 5 years as of the month of completion of construction or purchase.

5. Vehicle and Vessel Licence Tax
All the vehicles owned and used by foreign invested enterprises are subject to this tax according to ¡°The Interim Regulations on the Vehicles and Vessels Operation Licence Tax¡±. The tax rates are as follows:

6. Individual Income Tax
(1) The individul income, such as wages and salaries of foreigners working in China shall be taxed at the following progressive rates:
(2) Individual income tax shall also be levied on those who have income derived from working in any of the following service businesses in the territory of China: design,decoration, installation, drafting, chemical analysis, testing, medicine, law, accounting, consulting, giving lecture, press, radio broadcasting, translation, examination and checking of manuscript, writing, painting, sculpture carving, movie and television, audio recording, video recording, performance, display, advertising, exhibition, technical service, introduction service, brokerage service, agency service, and others. The income taxable each time is the remaining sum of the income after RMB 800 is deducted if the said income is under RMB 4,000. If the said income is over RMB 4,000, 20% of the income shall be deducted and the remaining sum is the amount taxable. The tax rate is 20%. If an individual¡¯s income taxable is over RMB 20,000 but under RMB 50,000, the tax rate to the part which exceeds RMB 20,000 shall be increased by 50% from its original rate. The tax rate to the part which exceeds RMB 50,000 shall be increased by 100% from its original tax r