August 29 2023

China Increases Fiscal and Tax Support to Attract Foreign Investment

The Chinese government released on August 13, 2023 the Guidelines on Further Optimizing Business Environment and Attracting More Foreign Investment. The document provides 24 guiding measures in six aspects, stressing the need to ensure national treatment for foreign enterprises and increase fiscal and tax support.

The document encourages foreign enterprises to re-invest in China by pledging temporary exemption of the withholding income tax on profits earned by foreign investors in China. It instructs departments in charge of commerce and tax at various levels to refine the application scope of the policies, as well as the required application materials and the handling procedures, so as to ensure the implementation of the related favourable tax policies for foreign enterprises.

It supports foreign individuals to apply for exemption of tax on their allowances and subsidies such as housing subsidies, language training fees, and children's education fees in accordance with applicable national rules, and instructs foreign R&D centres to enjoy the favourable import tax policy that supports scientific and technological innovation and the VAT refund policy for the purchase of Chinese domestic equipment in accordance with applicable national rules.