Beijing Municipality, Clarifying Several Policy Questions on Enterprise Income Tax Circular

Issued: November 29 2001
Effective: 2001

Main contents: The Circular stipulates that where there is a difference between the income tax rate applicable to the investor and that applicable to the investee, the investor should make up the difference in income tax on its income derived from the investment in the investee unless there is tax reduction or exemption granted by State tax regulations (Item Five). The Circular also clarifies the arrangement for crediting of technological improvement of domestic equipment for investment against enterprise income tax while the enterprise is eligible for a tax reduction or exemption at the same time (Item Six). Item Seven stipulates that loss in equity investment should be compensated by gains in transfer of equity investment before gains in equity investment (Item Seven).
Related legislation: Several Income Tax Questions Concerning Enterprise Equity Investments Circular, Jun 21 2000, CLP 2000 No.7 p15