China taxes resident enterprises on worldwide income and non-resident enterprises on China-source income only; resident individuals are taxed on worldwide income (with a favorable 6-year rule easing the transition for new foreign residents), non-residents on China-source income. China operates an administrative assessment system for most individuals (employer withholding settles most wage-earner liability, with the State Taxation Administration reconciling via an annual settlement for those required to file) alongside self-reporting obligations for business and complex income.
The Chinese tax year is the calendar year. The individual annual reconciliation filing period generally runs 1 March to 30 June of the following year for taxpayers required to file (many wage earners with employer-withheld income only are not required to file at all).
China's headline corporate income tax (CIT) rate is 25%.
The headline personal income tax (PIT) rate is 45%.
The standard VAT/GST (or equivalent consumption tax) rate is 13%, 9, or 6 by category.
An individual with a domicile in China (habitual residence due to household registration, family, or economic ties), or who spends 183 days or more in China in a calendar year, is a Chinese tax resident. Non-domiciled foreign individuals who meet the 183-day threshold are taxed on China-source income plus foreign-source income actually paid or borne by a China entity - but not full worldwide income - until they complete six consecutive 183-day years, at which point worldwide income becomes taxable from the seventh year onward. The six-year count resets if the individual spends more than 30 consecutive days outside China in any year. Non-residents are taxed only on China-source income.
A non-Chinese entity has a China permanent establishment through a fixed place of business, a dependent agent habitually concluding contracts in China on the entity's behalf, or a service PE where personnel are present in China performing services beyond a specified duration threshold (commonly cited around 183 days in a 12-month period, subject to the specific treaty), following China's domestic law as modified by any applicable tax treaty.
China's CFC rule targets a foreign enterprise controlled by Chinese tax residents (individuals or entities) and established in a jurisdiction with an effective tax rate below 12.5%, where profits are not distributed (or under-distributed) without reasonable business justification. Control generally means a Chinese resident directly or indirectly holds 10% or more of voting shares on any day of the year, with Chinese residents collectively holding 50% or more. Undistributed profits can then be deemed distributed and taxed to resident shareholders. China maintains a "white list" of jurisdictions (including the US, UK, France, Germany, Japan, Italy, Canada, Australia, India, South Africa, New Zealand, and Norway) that are not treated as low-tax for this purpose, and a de minimis exemption applies where the CFC's annual profit is below RMB 5 million.
China disallows interest expense on related-party debt exceeding a safe-harbor debt-to-equity ratio: 5:1 for financial enterprises and 2:1 for all other enterprises. Interest on debt exceeding these ratios remains deductible if the taxpayer can substantiate the financing was on arm's-length terms (typically via contemporaneous transfer pricing documentation).
China does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics under Chinese law. China has not implemented a comprehensive ATAD2-style anti-hybrid regime in the EU sense, though its general anti-avoidance rule (GAAR) and transfer pricing framework can be applied to counteract abusive cross-border arrangements involving hybrid structures on a case-by-case basis.
No foreign bank account or foreign financial asset reporting regime exists in China requiring residents to separately disclose foreign accounts; China does maintain strict foreign exchange controls (administered by the State Administration of Foreign Exchange, SAFE) governing outbound and inbound currency movements, which function differently from an account-disclosure regime.
China provides a form of participation relief for qualifying dividends between resident enterprises: dividends, bonuses, and other equity investment gains between qualifying resident enterprises are generally exempt from Chinese corporate income tax, though this domestic inter-company exemption does not extend broadly to foreign-source dividends received by a Chinese parent from an offshore subsidiary, which remain subject to China's ordinary worldwide-taxation and foreign tax credit framework rather than a broad participation exemption.
China has a real foreign tax credit regime available to both resident individuals and enterprises for foreign tax paid on foreign-source income also taxed in China, capped at the Chinese tax otherwise due on that income, computed on a per-country basis with a 5-year carryforward for excess credits.
As of 30 June 2026, China has concluded tax treaties or arrangements with 114 countries and regions, in addition to separate double-taxation arrangements with Hong Kong SAR and Macao SAR reflecting the "one country, two systems" framework. China has also entered into a number of standalone tax information exchange agreements (TIEAs) with jurisdictions it does not have a full treaty with, including the British Virgin Islands, Cayman Islands, Isle of Man, Liechtenstein, and San Marino.