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Go West! Extension of Tax Incentives for the Go West Campaign

On July 27th, 2011, the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation jointly issued guidance setting out the corporate income tax (CIT) and import duty incentives available for enterprises in the western regions of China.

The latest change introduced reduces the corporate income tax rate for businesses engaging in industries that China wants to promote in the Western provinces. Such businesses will have a tax rate of 15 per cent, a 10 percent reduction from the regular rate. This reduced tax rate is in effect until Dec. 31, 2020.

This new Circular, or Cai Shui No. 58, picks up where the previous Circular (No. 202) left off, extending the previous incentives into December 31st, 2020.

The 12th Five Year Plan in March highlighted the need for coordinated and large-scale development in the region. Over the last decade, since the start of the Go West Campaign in 2000, Beijing has poured money into infrastructure development, such as in the area of transportation, and this has encouraged a very strong response. As well, more migrant workers from inland communities have begun to return to their homes from the coastal area as job opportunities opened up in the West.

Note:

The “encouraged type enterprise” refers to enterprises whose main business falls within the scope of “Catalogue of Encouraged Type Industries in Western Regions.” They are also enterprises whose revenue from the core business accounts for more than 70% of their total revenue.

Western regions include Chongqing, Sichuan Province, Guizhou Province, Yunnan Province, Tibet Autonomous Zone, Shaanxi Province, Gansu Province, Ningxia Hui Autonomous Zone, Qinghai Province, Xinjiang Uygur Autonomous Zone, Xinjiang Production and Construction Corps, Inner Mongolia Autonomous Zone and Guangxi Zhuang Autonomous Zone. The preferential policies for western regions shall also be applied to Xiangxi Tujia and Miao Autonomous Prefecture in Hunan Province, Enshi Tujia and Miao Autonomous Prefecture in Hubei Province and Yanbian Korean Autonomous Prefecture in Jilin Province.

(Sources: KPMG, ICS Trust)

 

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