<p style="text-align: justify">In PRC, according to the provisions of the relevant acts, local resident enterprises and non-resident enterprise are income tax-payers and are subject to corporate income tax. Sole proprietorship and partnership are not applicable.</p> <p style="text-align: justify">Local resident enterprise refers to those entities legally established in China, or in accordance with the respective jurisdiction of the foreign countries (regions) but its actual management is in China.</p> <p style="text-align: justify">Local resident companies are subject to corporate income tax base on its incomes deriving from domestic and foreign.</p> <p style="text-align: justify">Non-resident enterprise refers to those entities established under the respective jurisdiction of the foreign ( region ) and its effective management are not in China, but establish in PRC territory, or has no establishment in China, but its corporate incomes are originating from China.</p> <p style="text-align: justify">Non-resident enterprises establish such organization or establishment in the territory. Its incomes are assessable from those derived from China, as well as those occurring outside China. Its institutions or establishments are effectively connected income, and are subject to corporate income tax.</p> <p style="text-align: justify">For those non-resident enterprises without establish any institutions or office in China but its incomes are derived from such organization, which has no actual connection, it should be based on their income sources within China to pay corporate income tax.</p> <p style="text-align: justify">The corporate income tax rate is 25%.<br /> Non-resident enterprises has not establish any institutions and places in China but its incomes are derived from China with such organization has no actual connection it should be based on their income sources within China to pay corporate income tax. The applicable tax rate for its income is 20%.</p> <p style="text-align: justify">In PRC, there are various kinds of tariff and the tax system is complicated, the tax burden is not low. Corporate financial officers, usually within the scope as permitted by law, or to the extent not prohibited by law, through production and business activities of the taxpayer to make some adjustments and arrangements to minimize the tax burden. This is so-called tax planning.</p> <p style="text-align: justify">The basic corporate tax planning are:-</p> <ul> <li>( One ) use of tax incentives</li> <li>( Two ) using the tax system design</li> <li>( Three ) avoid adverse tax burden</li> <li>( Four ) use of tax law "loophole"</li> </ul> <p style="text-align: justify"> </p>