SAT Standardizes CIT Preferential Policies During Transition Period

The State Administration of Taxation recently released a circular that further clarifies specific issues concerning resident enterprises selecting the application of tax rates and halved tax collections during the transition period for enterprises moving from preferential tax rates to the standard CIT rate which came into effect Jan. 1, 2010.

Guoshuihan [2010] No. 157, released April 21, stipulates that resident enterprises regarded as high-technology enterprises, that simultaneously meet the conditions for software manufacturing enterprises and integrated circuit production enterprises entitled to preferential corporate income tax policies of regular reduction of levy by half, may choose to apply the tax rate of 15 percent for high-technology enterprises or half of the 25 percent tax rate.

Those qualifying enterprises however, are not entitled to half of the 15 percent tax rate.

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