“税路通·鹭税畅行”丨境外投资者利润再投资，税收优惠升级~

Core Viewpoint - The article discusses a new tax credit policy for foreign investors in China, effective from January 1, 2025, to December 31, 2028, aimed at stabilizing foreign investment and encouraging reinvestment of profits [1]. Policy Highlights - The new policy allows foreign investors to offset 10% of their taxable income against the amount invested in direct investments in China from profits distributed by Chinese resident enterprises during the specified period [2][3]. - The policy emphasizes that the profits must come from actual distributions, such as dividends, and not from retained earnings [2]. Core Conditions - Profit Source: Profits must be derived from actual distributions of retained earnings from Chinese resident enterprises [2]. - Investment Method: Investments must be direct, including capital increases, establishment of new resident enterprises, or acquisition of equity from non-related parties [3]. - Investment Industry: The invested enterprises must belong to the encouraged categories listed in the "Encouraged Foreign Investment Industry Directory" [5]. - Holding Period: Foreign investors must hold their reinvested assets for at least 5 years (60 months) [7]. - Direct Fund Flow: Profits used for direct investment must be transferred directly without intermediary accounts [8]. Comparison of New and Old Policies - The new policy introduces a tax credit in addition to deferred tax benefits, allowing for a 10% tax offset based on the investment amount [10]. - The scope of eligible investments is narrowed to only those in encouraged industries, unlike the previous policy which allowed broader investment options [10]. - A mandatory 5-year holding period is introduced, with penalties for early withdrawal affecting tax credits [10]. Additional Notes - Foreign investors can apply for retroactive tax credits for eligible investments made between January 1, 2025, and the announcement date of the policy [11]. - The taxable amount that can be offset includes dividends, interest, and royalties received after the reinvestment date [11].