境外投资者以分配利润直接投资税收抵免政策出台—— 为投资中国打造更优税收环境

Core Viewpoint - The announcement by the Ministry of Finance, State Taxation Administration, and Ministry of Commerce introduces tax incentives for foreign investors who reinvest profits distributed by Chinese resident enterprises into domestic direct investments from January 1, 2025, to December 31, 2028, allowing a 10% tax credit against their taxable income for the investment amount [1][3]. Group 1: Policy Details - The new policy allows foreign investors to offset 10% of their taxable income with profits reinvested in eligible domestic projects, which can be carried forward if not fully utilized in the current year [1][3]. - The policy expands the scope of eligible projects for reinvestment, now including all non-prohibited foreign investment projects, enhancing the previous tax exemption policy established in 2018 [1][2]. - To qualify, the profits must be actual distributions from Chinese resident enterprises and used for direct investments such as capital increases, new projects, or equity acquisitions, excluding certain stock purchases [2][3]. Group 2: Investment Conditions - Foreign investors must hold their reinvested profits for at least 5 years (60 months) to benefit from the tax incentives, promoting long-term investment strategies [2][3]. - The reinvestment must be made in cash directly from the profit distribution enterprise to the investment entity, or through the direct transfer of assets in non-cash forms [2]. - If foreign investors withdraw their investments before the 5-year period, they must pay deferred taxes and may have their tax credit reduced proportionally [3].