State Administration of Taxation, Tax Issues Relevant to Paying of Enterprise Income Tax by Foreign-invested Venture Capital Investment Enterprises Circular

Issued: June 4 2003
Effective: March 1 2003

Main contents: The Circular clarifies that foreign-invested venture capital investment enterprises that engage in equity investment or assignment, or that provide venture investment management or consultancy for enterprises, are not deemed to be production-type enterprises and are not entitled to enjoy relevant preferential tax treatment (Item One). Foreign investors of a non-legal-person venture capital investment enterprise should calculate and pay enterprise income tax in accordance with provisions on foreign enterprises having establishments or sites in China. However if the non-legal-person venture investment enterprise does not have its own management but delegates its daily operation to another enterprise, its foreign investors should file tax returns and pay tax in accordance with provisions on foreign enterprises not having establishments or sites in China (Item Two).
Related legislation: Administration of Foreign-invested Venture Capital Investment Enterprises Provisions, Jan 30 2003, CLP 2003 No.2 p35; PRC Foreign-invested Enterprise and Foreign Enterprise Income Tax Law, Apr 9 1991, CLP 1991 No.3 p25 and PRC Foreign-invested Enterprise and Foreign Enterprise Income Tax Law Implementing Rules, Jun 30 1991, CLP 1991 No.7 p16