(1) Enterprise Income Tax
The income tax on enterprises with foreign investment established in Special Economic Zones, foreign enterprises which have establishments or places in Special Economic Zones engaged in production or business operations, and on production-oriented enterprises with foreign investment in Economic and Technological Development Zones, shall be levied at the reduced rate of fifteen percent.
The income tax on production-oriented enterprises with foreign investment established in coastal economic open zones or in the old urban districts of cities where the Special Economic Zones or the Economic and Technological Development Zones are located, shall be levied at the reduced rate of twenty-four percent.
The income tax on enterprises with foreign investment engaged in energy resource, transportation, port, and dock projects may be levied at the reduced rate of fifteen percent with the approval of the State Administration of Taxation.
Any enterprise with foreign investment of a production nature scheduled to operate for a period of not less than ten years shall, from the year beginning to make profit, be exempted from income tax in the first and second years and allowed a fifty percent reduction in the third to fifth years. However, the exemption from or reduction of income tax on enterprises with foreign investment engaged in the exploitation of resources such as petroleum, natural gas, rare metals, and precious metals shall be regulated separately by the State Council.
Chinese-foreign equity joint ventures engaged in port and dock construction where the period of operations is 15 years or more shall, following application by the enterprise and approval thereof by the tax authorities of provinces, autonomous regions, or municipalities directly under the Central Government of the location and commencing with the first profit-making year, be exempt from enterprise income tax from the first year to the fifth year and subject to enterprise income tax at a rate reduced by one half for the sixth year through the tenth year.
Any enterprise with foreign investment which is engaged in agriculture, forestry or animal husbandry and any other enterprise with foreign investment which is established in remote underdeveloped areas may, upon approval by the competent department for tax affairs under the State Council of an application filed by the enterprise, be allowed a fifteen to thirty percent reduction of the amount of income tax payable for a period of another ten years following the expiration of the period for tax exemption or reduction.
Export-oriented enterprises invested in and operated by foreign businesses for which in any year the output value of all export products amounts to 70% or more of the output value of the products of the enterprise for that year, may pay enterprise income tax at the tax rate specified in the Tax Law reduced by one half after the period of enterprise income tax exemptions or reductions has expired in accordance with the provisions of the Tax Law. However, export-oriented enterprises in the special economic zones and economic and technological development zones and other such enterprises subject to enterprise income tax at the tax rate of 15% that qualify under the above-mentioned conditions shall pay enterprise income tax at the tax rate of 10%.
Advanced technology enterprises invested in and operated by foreign businesses which remain advanced technology enterprises after the period of enterprise income tax exemptions or reductions has expired in accordance with the provisions of the Tax Law may continue to pay for an additional three years enterprise income tax at the tax rate specified in the Tax Law reduced by one half.
Losses incurred in a tax year by any enterprise with foreign investment and by an establishment or a place set up in China by a foreign enterprise to engage in production or business operations may be made up by the income of the following tax year. Should the income of the following tax year be insufficient to make up for the said losses, the balance may be made up by its income of the further subsequent year, and so on, over a period not exceeding five years.
(2) Individual Income Tax
For foreign nationals working in the enterprises with foreign investment or foreign enterprises set up in China, their taxable income is the balance of their monthly income after the additional deductions for expenses RMB 3200 in addition to a monthly deduction for expenses of RMB 800.
(3) Profit
The profits that foreign investors make from the enterprises with foreign investment are exempt from the income tax.
(4) Importing Equipment
When the encouraged projects in Catalogue for the Guidance of Foreign Investment Industries import equipment for self use within the total investment (including technology, fittings and spare parts along with equipment imported in accordance with contacts) except for the commodities listed in Catalogue of Non-Duty-Free Commodities Imported for Foreign-Funded Projects, they shall be exempted from the customs duties and value-added tax for import linkages.
    In case of the foreign-funded enterprises of encouraged categories, foreign-funded research and development centers and the technological innovation of foreign-funded technically advanced enterprises or foreign-funded enterprises which have been established, if they import within the prescribed scope of production and management self-used equipment, supporting parts, auxiliaries and relative technology that the local enterprises can't produce or supply or the local products performance can not meet their requirement, they shall be exempted from the customs duties and value-added tax for import linkages in accordance with Circular of the State Council on the Adjustment of Tax Policy on Equipment Imports (Guo Fa [1997] No. 37).
If foreign-funded enterprises import equipment for self use, as well as technology, fittings and spare parts along with equipment imported in accordance with contracts in order to manufacture the commodities listed in the Catalog of the State High-tech Products, these items, except the ones listed in Catalogue of Non-Duty-Free Commodities Imported for Domestic Investment Projects  (Guo Fa [1997] No. 37), shall be exempted from the customs duties and value-added tax for import linkages.
(5) Purchasing Domestic Equipment
For investment projects whose capital of foreign investors reaches 25% or above of the capital paid-up by all the investors of the foreign-funded enterprises and which also accord with the encouraged type in Catalogue for the Guidance of Foreign Investment Industries and Catalogue of Key Industries, Products and Technologies Encouraged for Development by the State, the unused domestic equipment purchased by foreign-invested enterprises with currency in China (including part of plastic, rubber, ceramic and porcelain accessories and pipes used in petrochemical projects bought together with the equipment and listed in purchase contracts ), will enjoy all value-added tax refund.
As to the equipment listed in Catalogue of Non-Duty-Free Commodities Imported for Foreign-Funded Projects and Catalogue of Non-Duty-Free Commodities Imported for Domestic Investment Projects and purchased in China, foreign-invested enterprises can not enjoy favorable tax refund policy.
(6) Reinvestment
Any foreign investor of an enterprise with foreign investment which reinvests its share of profit obtained from the enterprise directly into that enterprise by increasing its registered capital, or uses the profit as capital investment to establish other enterprises with foreign investment to operate for a period of not less than five years shall, upon approval by the tax authorities of an application filed by the investor, be refunded forty percent of the income tax already paid on the reinvested amount.
Where foreign investors invest directly to organize and expand export-oriented or advanced technology enterprises within the boundaries of China, the entire portion of enterprise income tax that has already been paid for on the reinvested amount may, in accordance with the provisions of the State Council, be refunded.
(7) Fixed Assets Depreciation
For the fixed assets, if the depreciation period needs to be shortened due to special reasons, the enterprise can file an application, which will be submitted to the State Administration of Taxation for approval level by level after the examination and verification of the local tax bureaus. Such fixed assets include:
1. Machines and equipment severely eroded by acid and alkali, as well as factory buildings  under perennial shocks or vibration;
2. Machines and equipment in a perennial state of running for improving the utilization frequency and strengthening the use intensity;
3. Fixed assets which will belong to the Chinese side after the cooperation expires and the cooperation period of Chinese-foreign contractual joint venture is shorter than the depreciation period stipulated by Article 35 of the Detailed Rules.
(8) Miscellaneous
Royalty derived from offering specialized technology for scientific research, exploiting energy resources, developing traffic, improving agriculture, forestry and animal husbandry, as well as developing important technologies, can be taxed at a reduced rate of 10% with the approval of the competent tax departments under the State Council. If the technologies provided are advanced or the terms are favorable, the income tax can be exempted.
The income derived from technology transfer, technology development and their related technology consultation and technology service offered by the units or individuals (including enterprises with foreign investment, the research and development centers invested and set up by foreign investors, foreign enterprises and foreign nationals) shall be exempt from the business tax.
The software charge paid abroad by foreign-funded enterprises for introducing into advanced technologies listed in Catalogue of the State High-tech Products in accordance with the contracts shall be exempted from the customs duties and value-added tax for import linkages.
In the enterprises where technology development fee occurred within the Chinese territory for the year has increased by over 10% (including 10%) than that for the previous year, they shall be permitted, upon examination and approval by the taxation authorities, to re-offset 50% of the technology development fee actually used for the year for the taxable income for the same year. In the enterprises where technology development fee has increased by over 10% than that for the previous year, and 50% of the amount actually used by the enterprises is higher than the taxable income for this year, the enterprises may be permitted to offset the portion which is not exceeding their taxable income; for the exceeding portion, they shall not be allowed to offset in this year or for the succeeding years.