SAT Clarifies CIT Payment Rate from High-tech Enterprises During Qualification Review

China’s high-tech enterprises enjoying the country’s favorable taxation policies shall pay their annual corporate income tax (CIT) at a rate of 15 percent during the time their qualification validation is under review.

In the “Announcement with Regards to High-tech Enterprises’ CIT Prepayment Issue during their Qualification Review” (SAT Announcement [2011] No. 4)” released on January 10, the State Administration of Taxation (SAT) requests high-tech enterprises to submit review applications three months before their qualification expires. During the period when current qualification remains valid and new qualification validation is under review, the enterprises shall prepay its CIT for the tax year at a temporary rate of 15 percent.

The announcement takes effect from February 1, 2011.

According to China’s CIT Law that took effect on January 1, 2008, the country’s standard CIT rate is 25 percent. High-tech enterprises that meet certain criteria receive favorable tax treatment and submit the CIT at a rate of 15 percent.

---