The content of the tax credit policy：

Foreign investors who use profits distributed by resident enterprises in China for direct investment within the period of January 1, 2025 to December 31, 2028 may offset 10% of the current year's taxable amount based on the investment amount if they meet the conditions. If the current year's amount is insufficient to offset, it can be carried forward to future years. If the tax rate applicable to equity investment income such as dividends and bonuses in the tax treaties signed between China and foreign governments is less than 10%, the agreed tax rate shall be implemented.

Conditions for enjoying policies:

Profit nature: The profits distributed to overseas investors must be equity investment income such as dividends and bonuses formed by retained earnings actually distributed by Chinese resident enterprises to investors.

Investment methods: including equity investments such as capital increase, new construction, and equity acquisition, but excluding new additions, conversions, and acquisitions of shares of listed companies (excluding eligible strategic investments). Specifically, it includes adding or converting paid in capital or capital reserves of domestic resident enterprises, investing in the establishment of new resident enterprises, and acquiring equity of domestic resident enterprises from non related parties.

Industry requirement: During the reinvestment period, the industry engaged by the invested enterprise must belong to the national encouraged foreign investment industry directory listed in the "Catalogue of Encouraged Foreign Investment Industries".

Investment period: Overseas investors who reinvest in China must hold it continuously for at least 5 years (60 months) or more.

Capital flow: For payments made in cash, the funds must be directly transferred from the profit distribution enterprise account to the invested enterprise or equity transferor account, and cannot be transferred to other accounts; For non cash payments, the ownership of assets must be directly transferred and cannot be held by other enterprises or individuals on their behalf or temporarily held.

Scope of tax offset: The tax amount that can be offset refers to the enterprise income tax that foreign investors should pay on dividends, interest, royalties, and other income obtained from profit distribution enterprises after the date of reinvestment, in accordance with Article 3 (3) of the Enterprise Income Tax Law.

Tax collection and management process：

Information provision and withholding processing: Qualified overseas investors should provide relevant information to the profit distribution enterprise. Based on this, the profit distribution enterprise can temporarily exempt the enterprise income tax on reinvested profits and declare a deduction of the overseas investor's taxable amount to the competent tax authority when paying the relevant income.

Investment recovery treatment: If the investment is recovered after 5 years, it is necessary to declare and make up for the deferred tax to the tax authority where the profit distribution enterprise is located within 7 days after recovery. The tax credit balance of reinvestment can be used to offset the taxable amount. If the investment is recovered within 5 years, it shall be deemed as not meeting the preferential conditions. In addition to paying the tax, the tax credit amount shall be reduced proportionally. If the used amount exceeds the adjusted amount, the excess shall be paid within 7 days.

Information submission: Overseas investors should submit relevant information and vouchers to the local commerce authority through the unified platform of the Ministry of Commerce's business system through the invested enterprise. After verification by the competent commerce department, provide the invested enterprise with materials such as the "Profit Reinvestment Status Table". Provincial commerce authorities are required to summarize and provide relevant information to the same level finance and tax departments, and report to the Ministry of Commerce. When recovering investment, relevant information must also be submitted according to this process.

Special case handling: After overseas investors enjoy the policy, if the invested enterprise undergoes restructuring and meets the special restructuring conditions, and is subject to tax treatment according to the special restructuring, they can continue to enjoy the tax credit policy.

Policy implementation time: This announcement will be implemented from January 1, 2025 to December 31, 2028. From January 1, 2025, investments that meet the conditions before the announcement can be retroactively eligible for policy benefits; Investments made before January 1, 2025 cannot be retrospectively enjoyed. If there is still a credit balance after December 31, 2028, it can continue to be enjoyed until the balance is zero.