Core Viewpoint - The announcement by the National Taxation Administration regarding the tax credit policy for foreign investors reinvesting distributed profits provides clarity on the implementation of tax deferral and tax credit policies, ensuring that foreign investors can benefit from these incentives while adhering to specific conditions [1][2]. Group 1: Tax Deferral Policy - The tax deferral policy remains effective despite the issuance of the new announcements, allowing foreign investors to continue enjoying the benefits of deferring corporate income tax on reinvested profits [1]. - Foreign investors can still benefit from the tax credit policy while enjoying the tax deferral policy [1]. Group 2: Reinvestment Timeframe - The reinvestment period for foreign investors is calculated based on the month specified in the "Profit Reinvestment Situation Table" issued by the business authority, with the earlier of the month of investment recovery or the completion of legal changes marking the end of the reinvestment period [2]. Group 3: Tax Credit Calculation - The tax credit amount for reinvestment is determined based on two scenarios: either 10% of the reinvestment amount or a lower dividend tax rate as per applicable tax treaties, with the chosen rate being fixed for future calculations [3]. - For multiple reinvestments by the same foreign investor, the tax credit amounts must be aggregated separately for each profit distribution enterprise [3]. Group 4: Adjustments to Tax Credit Amounts - If a foreign investor does not meet the conditions for the tax credit policy, adjustments to the tax credit amounts will be required [6]. - In cases where a foreign investor recovers part of their investment before the five-year holding period, the tax credit amount must be reduced accordingly [7]. Group 5: Late Payment Penalties - Foreign investors who incorrectly benefit from the tax credit policy and underpay taxes will incur late payment penalties starting from the date they enjoyed the tax credit [8]. Group 6: Eligible Tax Amounts for Credit - The eligible tax amounts for credit must meet specific criteria, including being derived from the same profit distribution enterprise and occurring after the reinvestment period [9]. Group 7: Currency Conversion for Reinvestment - When foreign investors reinvest in currencies other than RMB, the reinvestment amount must be converted to RMB using the middle exchange rate on the actual payment date [10]. Group 8: Tax Payment Procedures upon Investment Recovery - Upon recovering investments that enjoyed the tax credit policy, foreign investors must differentiate between those that meet the tax credit conditions and those that do not, calculating the tax and penalties accordingly [11]. Group 9: Order of Investment Recovery - The order of recovering investments is prioritized based on whether they have enjoyed the tax credit policy, with specific sequences for different types of investments [13]. Group 10: Handling Remaining Tax Credit Balances - Foreign investors with remaining tax credit balances after December 31, 2028, can continue to utilize these credits until the balance is exhausted [20]. Group 11: Retroactive Application of Tax Credit Policy - Foreign investors can apply for retroactive tax credits for eligible investments made between January 1, 2025, and the announcement date, but these credits can only offset taxes incurred after the announcement [21].

国家税务总局关于境外投资者以分配利润直接投资税收抵免政策有关事项的公告 国家税务总局公告 2025年第18号 为贯彻落实《财政部 税务总局 商务部关于境外投资者以分配利润直接投资税收抵免政策的公告》 （2025年第2号），现就有关事项公告如下： 一、境外投资者以分得的利润用于补缴其在境内居民企业已经认缴的注册资本，增加实收资本或资本公 积的，属于"新增或转增中国境内居民企业实收资本或者资本公积"情形。 二、境外投资者按照商务主管部门出具的《利润再投资情况表》中列明的再投资时间当月，确认开始计 算其持有该再投资的时间。 三、境外投资者享受再投资税收抵免政策后，从被投资企业减资、撤资，或者转让被投资企业股权的， 以被投资企业完成股权变更或注销登记手续当月，确认停止计算其持有该再投资被收回部分的时间。 境外投资者在被投资企业完成股权变更或注销登记手续前，从被投资企业取得资产或从股权受让方取得 股权支付对价的，以取得上述资产或者股权支付对价当月，确认停止计算其持有该再投资被收回部分的 时间。 四、境外投资者在确定税收抵免额度时，可选择按再投资额的10%或者可适用的税收协定（或安排）规 定的低于10%的股息征税比例计算 ...

Group 1 - The announcement states that foreign investors using profits to replenish registered capital in domestic resident enterprises, thereby increasing paid-in capital or capital reserves, falls under the category of "new or increased paid-in capital or capital reserves of domestic resident enterprises" [1] - Foreign investors can choose to calculate the tax credit amount based on either 10% of the reinvestment amount or a lower dividend tax rate as stipulated in applicable tax treaties [1] - Once a tax rate is selected, it cannot be changed to a lower rate under tax treaties after holding the investment for 5 years when recovering the investment and declaring deferred taxes [1]

Domestic News - The third China International Supply Chain Promotion Expo opened in Beijing, with Vice Premier He Lifeng emphasizing China's role as a key player in global supply chains and its commitment to promoting mutual benefits and cooperation in the industry [1] - The Ministry of Commerce issued a notice to encourage foreign investors to reinvest profits in China through tax incentives, highlighting the importance of stabilizing investment expectations and reducing costs [1] - AMD announced plans to resume shipments of its MI308 products to China once the necessary export licenses are approved, following communication with the U.S. government [2] - Seven major potassium fertilizer distribution companies, including China Agricultural Materials Group, called for increased potassium supply and price reductions to stabilize the market [2] - Huawei regained the top position in China's smartphone market with an approximate 18% share in Q2, while competitors like Vivo and OPPO saw declines [2] International News - European Central Bank board member Nagel stated that a "steady hand" is needed to address uncertainties arising from U.S. tariffs, indicating geopolitical tensions affecting prices [4] - U.K. inflation rate rose to 3.6% in June, exceeding expectations, as the Bank of England predicts inflation may peak at 3.7% in September [4] - In June, foreign investors net sold $2.11 billion in bonds from five Asian countries, marking the first monthly outflow in five months, with Indonesia experiencing the largest outflow [4] Market Overview - The Indonesian central bank cut interest rates by 25 basis points, aligning with expectations of decreasing inflation in 2025 and 2026 [5] - The Shanghai Composite Index closed at 3503.78, down 0.03%, while the Shenzhen Component Index fell 0.22% to 10720.81 [5] - The onshore RMB was at 7.1776, appreciating by 32 points, while the offshore RMB remained stable at 7.1824 [5]

Core Viewpoint - The Ministry of Commerce has issued a notice regarding the implementation of tax credit policies for foreign investors directly investing through profit distribution [1] Group 1 - Provincial commerce authorities are required to collaborate with finance, taxation, and foreign exchange departments to establish a cross-departmental management service mechanism for tax credit [1] - The notice emphasizes the need for a specific workflow to be developed for the implementation of the tax credit policy [1] - There is a call for enhanced collaboration with market regulation departments to ensure proper qualification review and regulatory responsibilities are fulfilled [1] Group 2 - The notice mandates adherence to information sharing requirements as outlined in Article 6 of the announcement [1]

Core Viewpoint - The announcement outlines a tax credit policy for foreign investors reinvesting profits distributed by Chinese resident enterprises, effective from January 1, 2025, to December 31, 2028, allowing a 10% tax credit on the reinvestment amount against the annual taxable income of the foreign investor [3][10]. Summary by Sections Tax Credit Policy - Foreign investors can receive a tax credit of 10% on the amount reinvested in China from profits distributed by Chinese resident enterprises during the specified period [3][10]. - If the applicable tax rate under tax treaties with foreign governments is lower than 10%, the treaty rate will apply [3]. Conditions for Eligibility - The profits must be actual distributions from Chinese resident enterprises, classified as dividends or similar equity income [3]. - Eligible reinvestments include capital increases, new establishments, and equity acquisitions, excluding purchases of listed company shares (with some strategic investment exceptions) [3][4]. - The reinvested profits must be in cash or directly transferred assets without intermediary holding [6]. Investment Duration and Compliance - Foreign investors must hold the reinvested assets for at least 5 years (60 months) to qualify for the tax credit [5]. - Upon withdrawal of investments before the 5-year period, investors must pay deferred taxes and may have their tax credit reduced proportionally [7]. Reporting and Verification - Foreign investors must report relevant information through the unified platform managed by the Ministry of Commerce, including details about the reinvestment and the involved enterprises [8]. - Local commerce departments will verify the submitted information and confirm eligibility for the tax credit [8]. Special Conditions - If the invested enterprises undergo restructuring that meets specific criteria, they can continue to enjoy the tax credit [9]. - The policy will be enforced from January 1, 2025, to December 31, 2028, with provisions for any remaining tax credit balances to be utilized until exhausted [10].

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].

Core Viewpoint - The announcement outlines a tax credit policy for foreign investors reinvesting profits distributed by Chinese resident enterprises, effective from January 1, 2025, to December 31, 2028, allowing a 10% tax credit on the reinvestment amount against the annual taxable income of foreign investors [2][7]. Summary by Sections Tax Credit Policy - Foreign investors can offset 10% of their reinvestment amount against their taxable income if the profits are reinvested in eligible domestic investments from January 1, 2025, to December 31, 2028 [2][3]. - If the tax treaty with a foreign government stipulates a lower tax rate on dividends and similar income, that rate will apply [2]. Eligibility Criteria - The profits must be actual distributions from Chinese resident enterprises, classified as dividends or similar equity income [2]. - Eligible reinvestments include capital increases, new establishments, and equity acquisitions, excluding stock purchases of listed companies (with some strategic investment exceptions) [2][3]. - The reinvestment must be in industries listed in the "Encouraged Foreign Investment Industry Catalog" [3]. - Foreign investors must hold the reinvested assets for at least 5 years [3]. Payment and Documentation - Profits used for reinvestment must be paid in cash directly from the profit-distributing enterprise to the invested enterprise, without prior circulation in other accounts [3]. - Documentation must be provided to the profit-distributing enterprise to avoid withholding tax on the reinvested profits [4]. Withdrawal and Tax Obligations - After 5 years, if foreign investors withdraw their investments, they must report and pay any deferred taxes within 7 days [5]. - If investments are withdrawn before 5 years, the tax benefits will be recalibrated, and any excess credits must be repaid [5]. Reporting Requirements - Foreign investors must report their reinvestment details through a unified platform managed by the Ministry of Commerce, including information about the invested enterprises and the amounts involved [5][6]. - The local commerce department will verify the submitted information and report to the provincial level [6]. Special Conditions - If the invested enterprise undergoes a restructuring that meets specific conditions, the tax credit policy can still be applied [6]. Implementation Timeline - The policy is effective from January 1, 2025, to December 31, 2028, with provisions for any remaining tax credits to be utilized until exhausted [7].

Core Viewpoint - The Chinese government has introduced a tax credit policy to encourage foreign investors to reinvest profits in domestic enterprises from January 1, 2025, to December 31, 2028, allowing eligible investors to offset 10% of their taxable income against their investment amount [1][2]. Group 1: Policy Details - The new policy allows foreign investors to enjoy tax credits on profits distributed by Chinese resident enterprises, applicable to direct investments such as capital increases, new establishments, and equity acquisitions, excluding certain stock purchases [2]. - The policy requires that the reinvested profits must be retained earnings distributed as dividends or similar equity investment returns, and the investment must be held for at least 5 years [2][3]. - If foreign investors withdraw their investments before the 5-year period, they will lose the tax credit benefits and must repay any deferred taxes [3]. Group 2: Historical Context - This policy builds on a previous initiative from 2017, which exempted foreign investors from withholding income tax on reinvested profits, further promoting foreign investment in China [1].

Core Points - The Chinese Ministry of Finance, State Taxation Administration, and Ministry of Commerce announced a tax credit policy for foreign investors using distributed profits for direct investment in China from January 1, 2025, to December 31, 2028 [1] - Foreign investors can offset 10% of their taxable income for the amount invested, with any unused credits allowed to be carried forward to future years [1] - The policy applies to profits distributed by Chinese resident enterprises and requires that the reinvestment meets specific conditions [1] Summary by Categories - **Policy Announcement** - The announcement details a new tax credit policy for foreign investors in China [1] - The policy is effective from January 1, 2025, to December 31, 2028 [1] - **Tax Credit Details** - Foreign investors can receive a tax credit of 10% of the amount invested from distributed profits [1] - Any unused tax credits can be carried forward to subsequent years [1] - **Eligibility Criteria** - Profits must be actual distributions from Chinese resident enterprises [1] - Investments must include capital increases, new projects, or equity acquisitions, excluding certain stock purchases [1] - The invested enterprise must operate in industries listed in the "Encouraged Foreign Investment Industry Catalog" [1] - A minimum holding period of 5 years (60 months) is required for the reinvestment [1] - Cash investments must be directly transferred from the profit distribution enterprise to the invested enterprise [1] - Non-cash investments must have ownership transferred directly without intermediary holding [1]