外资利好！三部门重磅发文

Core Viewpoint - The announcement from the Ministry of Finance, State Taxation Administration, and Ministry of Commerce introduces a tax credit policy for foreign investors reinvesting profits distributed by Chinese resident enterprises from January 1, 2025, to December 31, 2028, encouraging sustained foreign investment in China [1]. Summary by Sections - The policy allows eligible foreign investors to offset 10% of their taxable income against the amount invested, with any unused credits eligible for carryover to future years [1]. - The previous policy from 2017 exempted foreign investors from withholding tax on reinvested profits, which has led to increased reinvestment activities [1]. - To qualify for the tax credit, foreign investors must meet five specific conditions, including that the profits must be actual distributions from Chinese resident enterprises and the reinvestment must be in encouraged industries [3][4]. - Foreign investors are required to hold their reinvestments for at least five years (60 months) to benefit from the tax incentives [2][4]. - If foreign investors withdraw their investments before the five-year period, they will not enjoy the tax benefits and must pay deferred taxes accordingly [5][6]. - The announcement mandates that eligible foreign investors provide necessary documentation to the profit-distributing enterprises and that local authorities will monitor compliance with the policy [7].