In 2008, implementation of the "PRC Enterprise Income Tax Law Ordinance," explained the concept of non-resident enterprises: It refers to those under foreign (region) management bodies established under the foreign jurisdictions but without their management in China. In the Chinese territory, the establishment or place, or no establishment, places, but its incomes are originating in China's enterprises.
A. Institutions and companies in China engage in production and business activities, it includes :-
- (A) management agencies, business organizations and agencies ;
- (B) factories, farms , exploitation of natural resources ;
- (C) provision of services places ;
- (D) those engaged in construction, installation, assembly, repair, and exploration work places ;
- (E) Other institutions that engaged in production activities and places. Non-resident enterprises, commissioned sales agents in China, engage in the production and operation activities, shall include the commissioning of units or individuals that often sign contracts on its behalf or storage and the delivery of goods, the business agents as non-resident enterprises in China, with established institutions and places.
B. Income, it includes the sale of goods and provision of services, income from transfer of property income, dividends, bonuses and other equity investment income, interest income, rental income, royalty income, donations and other income. From those inside and outside China's income, it should be determined in accordance with the following principles:-
- (A) the sale of goods which is determined in accordance with the trading activities that take place ;
- (B) for providing labor income, it is determined in accordance with the service takes place ;
- (C) the transfer of property income, income from transfer of immovable property in accordance with the location for determination, in accordance with the alienation of movable chattels, the transfer income enterprises or institutions and places that is determined by location, equity investment income from transfer of assets to be invested are in accordance with the enterprise that is located correctly fixed ;
- (D) dividends, bonuses and other equity investment income, in accordance with the allocation of the proceeds of the enterprise, the location to determine ;
- (E) interest income, rental income, royalty income, in accordance with the burden of paying, the proceeds of enterprises or institutions or field to determine the location or in accordance with the burden of paying, the personal residence to determine ;
- (F) Other income, by the financial , tax authorities to determine.
For non-resident enterprises in China that has establishment or place, it shall be in such organization or establishment in the territory, with income derived from China, as well as those from outside, but it occurs in China with such organization or establishment that has actual contact [Note 1] for proceeds, it is subject to corporate income tax. These types of enterprises should pay according to the corporate income tax rate of 25%.
Non-resident enterprises without an establishment in China, places, or with, establishment or place, but its income are derived from with such organization that has no actual connection, it should be based on their income sources that within China to pay corporate income tax. The types of enterprises should pay according to tnhe corporate income tax rate of 20%.
[Note 1] The actual link refers to non-resident enterprises in China, established institutions and places that have to get proceeds, according to equity, debt as well as owning, managing, controlling for income, according to the property.