Core Viewpoint - The article discusses the implementation of tax credit policies for foreign investors reinvesting distributed profits in China, emphasizing the deferred tax policy and the calculation of tax credit amounts based on specific conditions [2][4]. Group 1: Deferred Tax Policy - The deferred tax policy for foreign investors remains effective, allowing them to reinvest profits distributed from Chinese resident enterprises without incurring withholding income tax [2]. - Foreign investors can choose to calculate the tax credit amount based on either 10% of the reinvestment amount or a lower dividend tax rate specified in applicable tax treaties [2][4]. Group 2: Tax Credit Calculation - In the first scenario, if a foreign investor meets the conditions, they can select between a 10% or a lower tax treaty rate for calculating the tax credit [4]. - In the second scenario, if a foreign investor has multiple eligible reinvestments, the tax credit amounts must be aggregated separately for each profit-distributing enterprise [5]. Group 3: Currency Conversion - When reinvesting in currencies other than RMB, the reinvestment amount should be converted to RMB using the middle exchange rate on the actual payment date to calculate the deferred tax and tax credit [10]. Group 4: Adjusting Tax Credit Amounts - Tax authorities may adjust the tax credit amount if they determine that a foreign investor does not qualify for the tax credit policy, such as if the investment is withdrawn before five years [11]. Group 5: Tax Payment Procedures - Foreign investors must differentiate whether they meet the tax credit policy conditions when recovering investments and calculate the tax and penalties accordingly [12][16]. Group 6: Investment Recovery Order - The order of recovering investments is established as follows: investments that have enjoyed tax credits first, followed by those that meet but have not enjoyed the policy, then those under deferred tax policy but not qualifying for tax credits, and finally other investments [16].

Core Points - The announcement by the Ministry of Finance, State Administration of Taxation, and Ministry of Commerce regarding the tax credit policy for foreign investors reinvesting distributed profits remains effective, allowing for deferred tax payment on eligible reinvestments [2][3]. Group 1: Tax Credit Policy - The deferred tax policy allows foreign investors to reinvest profits distributed from Chinese resident enterprises into non-restricted foreign investment projects without incurring withholding income tax [2]. - When calculating the tax credit amount for reinvestment, foreign investors can choose between a 10% rate or a lower rate specified in applicable tax treaties [3][5]. - An example illustrates that if a foreign company receives a profit of 10 million yuan and reinvests it, it can choose to apply either a 10% or a 5% tax rate for calculating the tax credit [4][5]. Group 2: Tax Credit Adjustment - If a foreign investor does not meet the conditions for enjoying the tax credit policy, the tax credit amount must be adjusted accordingly [8]. - An example shows that if a foreign investor recovers part of their investment before five years, they must adjust their tax credit amount and pay the corresponding deferred tax [8][13]. - The order of recovering investments is specified, prioritizing those that have enjoyed the tax credit policy [15][22]. Group 3: Currency and Tax Reporting - For reinvestments made in currencies other than RMB, the amount must be converted to RMB using the exchange rate on the payment date to calculate the deferred tax and tax credit [7]. - Foreign investors must submit specific tax forms when recovering investments, detailing the tax credit and any taxes owed [9][14].

Core Viewpoint - The new tax credit policy for foreign investors allows them to enjoy a 10% tax credit on reinvested profits from January 1, 2025, to December 31, 2028, while maintaining the effectiveness of the deferred tax policy [8][17]. Summary by Relevant Sections Tax Credit Policy - Foreign investors can receive a tax credit of 10% on the amount of reinvested profits during the specified period, with any unused credit eligible for carryover to future years [8][17]. - The tax credit applies to profits distributed by Chinese resident enterprises, which are reinvested in eligible domestic investments [5][12]. Investment Conditions - The profits must be derived from equity investments such as dividends and retained earnings from Chinese resident enterprises [5]. - The reinvestment must be held for a minimum of 5 years (60 months) [6][12]. - The investment must be in industries listed in the "Encouraged Foreign Investment Industry Catalog" [5][12]. Application Process - Foreign investors must submit relevant information through the invested enterprise to the local commerce department for verification [19][20]. - Upon approval, the invested enterprise will provide a "Profit Reinvestment Situation Table" to the foreign investor [19][20]. Tax Credit Adjustment - If a foreign investor withdraws part of the reinvested capital before the 5-year holding period, the tax credit amount will be adjusted accordingly [9][12]. - For example, if a foreign investor reinvests 10 million yuan and later withdraws 7 million yuan, the tax credit will be reduced by 700,000 yuan [9]. Documentation Requirements - To claim the tax credit, foreign investors must submit several documents, including the "China Tax Withholding Report" and the "Foreign Investor Reinvestment Tax Credit Information Report" [21][22]. - The invested enterprise must also report the necessary information to the tax authorities [22].

Core Viewpoint - The article discusses the effectiveness of the deferred tax policy for corporate income tax and clarifies that the relevant documents continue to apply, ensuring that foreign investors can still enjoy the deferred tax policy when reinvesting [2][21]. Summary by Sections Deferred Tax Policy - The deferred tax policy allows foreign investors to postpone withholding income tax on profits distributed from Chinese resident enterprises when reinvested in non-restricted foreign investment projects [4][21]. Tax Credit Calculation for Reinvestment - When foreign investors reinvest, the tax credit amount is calculated based on two scenarios: 1. For compliant enterprises, the credit can be calculated at either 10% or a lower rate specified in applicable tax treaties [6][5]. 2. If multiple compliant domestic investments exist, the tax credit must be aggregated by each profit-distributing enterprise [9][8]. Currency Conversion for Reinvestment - If reinvestment is made in currencies other than RMB, the amount should be converted to RMB using the middle exchange rate on the actual payment date to calculate the deferred tax and tax credit [10][11]. Adjustment of Tax Credit Amount - Tax authorities may adjust the tax credit amount if it is found that the foreign investor does not qualify for the tax credit policy, such as when the reinvestment is held for less than five years [12][13]. Understanding "Tax Amount Eligible for Credit" - The tax amount eligible for credit must meet specific conditions, including the type of income and the timing of income acquisition relative to reinvestment [14][15]. Holding Period for Reinvestment - The holding period for reinvestment begins from the month indicated in the "Profit Reinvestment Situation Table" issued by the business authority and ends when the investment is recovered or legal changes are completed [16][17]. Tax Payment Procedures for Recovered Investments - When recovering investments that enjoyed the tax credit policy, foreign investors must distinguish whether they meet the conditions for the tax credit and calculate the tax and penalties accordingly [21][27]. Order of Investment Recovery - The order of recovering investments is determined by the type of investment, prioritizing those that have enjoyed the tax credit policy [30][31]. Tax Payment for Partial Disposal of Investments - If a foreign investor recovers investments before five years, they must pay deferred taxes and proportionally reduce the tax credit amount [36][35]. Handling of Remaining Tax Credit Balances - Tax credits that remain after December 31, 2028, can still be utilized until the balance is zero [48].

Core Points - The announcement by the State Taxation Administration clarifies the implementation of the tax credit policy for foreign investors reinvesting distributed profits in China from January 1, 2025, to December 31, 2028, allowing a 10% tax credit on the investment amount [1][2] - The Ministry of Commerce reported that in the first half of 2025, there were 30,014 newly established foreign-invested enterprises, a year-on-year increase of 11.7%, while the actual use of foreign capital decreased by 15.2% to 423.23 billion yuan [1] Group 1: Tax Credit Policy - The tax credit policy allows foreign investors to offset their taxable income by 10% of the reinvested profits from January 1, 2025, to December 31, 2028, with the possibility of carrying forward any unused credits [1][2] - The policy does not affect the existing deferred tax policy, allowing foreign investors to benefit from both tax credit and deferred tax policies [2] Group 2: Reinvestment Guidelines - Foreign investors must confirm the reinvestment period based on the month indicated in the profit reinvestment report issued by the business authority [3] - The tax credit amount can be calculated based on either 10% of the reinvestment amount or the applicable lower tax rate from tax treaties, with the chosen method being fixed for future calculations [3][4] Group 3: Compliance and Adjustments - Tax authorities will adjust the tax credit amount if foreign investors do not meet the eligibility criteria, such as withdrawing investments before five years [4][5] - If foreign investors enjoy the tax credit but later find they do not qualify, they will need to pay back taxes along with late fees from the date they first benefited from the tax credit [5] Group 4: Currency and Tax Handling - For reinvestments made in currencies other than RMB, the amount must be converted to RMB at the exchange rate on the payment date for tax credit calculations [7] - When recovering investments that have benefited from the tax credit, foreign investors must differentiate between those that have and have not enjoyed the tax credit for tax payment calculations [9]

Core Points - The announcement outlines a tax credit policy for foreign investors reinvesting profits, allowing them to defer corporate income tax while enjoying a temporary tax incentive [1][23][26] - The policy is effective from January 1, 2025, and will remain in place until December 31, 2028, with provisions for any remaining credits to be utilized thereafter [20][26] Group 1: Tax Credit Policy Overview - The tax credit policy provides a temporary tax incentive for foreign investors reinvesting profits, allowing them to defer corporate income tax [1][23] - Foreign investors can choose to calculate the tax credit based on either 10% of the reinvestment amount or a lower dividend withholding tax rate as per applicable tax treaties [3][24] - The policy does not affect the existing deferred tax policies, which remain applicable [1][2] Group 2: Reinvestment Timeframe - The reinvestment period for foreign investors begins from the month specified in the "Profit Reinvestment Situation Table" issued by the business authority [2][23] - The holding period for the reinvestment must be at least five years (60 months) to qualify for the tax credit [2][6] Group 3: Calculation of Tax Credit Amount - The tax credit amount can be calculated based on the reinvestment amount, with options to select a 10% rate or a lower rate from tax treaties [3][24] - If a foreign investor has multiple reinvestments, the tax credit must be aggregated by the profit distribution enterprise [3][24] Group 4: Adjustments and Compliance - If a foreign investor does not meet the conditions for the tax credit, adjustments to the tax credit amount will be required [6][26] - Foreign investors must submit specific documentation to the tax authorities when claiming the tax credit or making tax payments [25][26] Group 5: Handling of Tax Credits Post-2028 - Any remaining tax credit balances after December 31, 2028, can still be utilized until fully exhausted [20][26] - Foreign investors can apply for retroactive tax credits for eligible investments made between January 1, 2025, and the announcement date [21][26]

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].

Core Viewpoint - The Chinese government has introduced a series of measures to encourage foreign direct investment (FDI) and reinvestment in response to the declining global FDI and increasing uncertainties in the international economic environment [1][8]. Summary by Relevant Sections Encouragement of Reinvestment - The new measures aim to promote reinvestment by foreign enterprises in China, allowing them to use profits earned in China for additional investments or new projects [1]. - The National Development and Reform Commission (NDRC) emphasizes the importance of reinvestment as a key aspect of stabilizing foreign investment [1]. Tax Incentives - A new tax credit policy has been introduced, allowing foreign investors to offset 10% of their investment amount against their taxable income for reinvestments made between January 1, 2025, and December 31, 2028 [2][3]. - The existing "deferred tax" policy has been in place since 2018, which allows foreign investors to postpone tax payments on reinvested profits, with reinvestment amounts reaching 162.28 billion yuan in 2024, a 15% increase year-on-year [2][4]. Policy Framework - The new tax credit mechanism builds on the deferred tax policy, providing clearer tax asset allocations and allowing for carryover of unused credits to future years [4]. - The policy encourages long-term investment commitments by imposing additional tax costs for short-term withdrawals, with a five-year holding requirement for the tax credit to remain valid [4]. Comprehensive Support Measures - The notification includes various support policies such as optimizing land use, simplifying administrative processes, facilitating foreign exchange fund usage, and increasing financial support for foreign investment [6]. - Specific measures include flexible land leasing options and streamlined processes for foreign enterprises establishing new entities in China [6]. Positive Impact on Employment and Economy - The cumulative number of foreign-invested enterprises in China is expected to exceed 1.239 million by the end of 2024, with reinvestment contributing to new production capacities, job creation, and tax revenue [7]. - The series of policies is seen as a comprehensive approach to encourage both new and reinvested foreign investments, enhancing the overall business environment in China [7][8].

Core Viewpoint - The personal pension system in China will be implemented nationwide starting December 15, 2024, after a two-year pilot in 36 cities, allowing all workers participating in basic pension insurance to join the scheme [1] Group 1: Implementation and Participation - The personal pension accounts can be opened through various online platforms and commercial banks, with a contribution limit of 12,000 yuan per year for purchasing approved financial products [1] - As of November 2024, 72.79 million personal pension accounts have been opened, although issues such as "high account opening but low contributions" need to be addressed [1] Group 2: Tax Policy and Economic Viability - The personal pension system adopts an EET (Exempt-Exempt-Tax) tax model, aiming to encourage middle and high-income groups to supplement their retirement savings while providing stable long-term capital for the market [2] - For ordinary participants, the economic benefits depend on the marginal tax rate and asset allocation efficiency, with those in higher tax brackets benefiting from tax deductions and investment returns [3] Group 3: Optimization and Improvement - Key issues include imbalanced tax incentives, low expected returns on pension financial products, and strict liquidity constraints, which hinder participation and investment confidence [4][5] - Recommendations for improvement include implementing tiered tax incentives, expanding the product range, and establishing flexible withdrawal rules for specific circumstances [5][6] Group 4: Young People's Investment Planning - Young individuals are encouraged to start planning for retirement investments, ideally between the ages of 35 and 40, focusing on long-term asset accumulation to ensure a smooth transition into retirement [6][7] - Emphasizing a disciplined investment approach, such as regular contributions, can help mitigate the impact of market volatility and achieve stable asset growth over time [7]