How much tax can talent and corporations be exempt in Hengqin? Here is the official answer

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A Macao resident working in the Guangdong-Macao In-depth Cooperation Zone in Hengqin with an annual salary of 220,000 RMB can enjoy a tax reduction of about 10,000 RMB for his income, thanks to the newly implemented preferential policy for individual income tax.

This is one of the examples that Su Kun, Deputy Director of the Executive Committee in the Guangdong-Macao In-depth Cooperation Zone in Hengqin, gave at a press conference to explain Hengqin's preferential policies for corporate income tax and individual income tax on June 16.

At the press conference, Su explained further that, for eligible enterprises in Hengqin, the corporate tax rate is reduced to only 15%, far lower than the statutory tax rate of 25% in other parts of the Chinese mainland. While in terms of personal income tax, for Macao residents working in Hengqin, the portion of their income tax exceeding the tax in Macao is exempted, meaning that they can enjoy the same tax rate in Macao while working in Hengqin.

Regarding the individual income tax, Su took an example of a Macao resident working in Hengqin in 2021 with a monthly salary of 20,000 patacas and a 13-month income. His total income in Hengqin was around 220,000 RMB. According to the individual income tax regulations on the Chinese mainland, he should pay the individual tax of 14,000 RMB. Due to the preferential policy, he only needed to pay a personal income tax of 2,300 RMB.

In terms of corporate income tax, Su also gave an example. If a high-tech enterprise in Hengqin established a branch in Singapore in 2021, and the unit's operating profit was 1 million RMB in 2021. Since the unit was established outside the Hengqin zone, according to the corporate income tax regulations on the Chinese mainland, the branch should pay a corporate income tax of 80,000 RMB at the rate of 25%. Now thanks to the new policy, the tax can be exempted.

Senior officials of the Guangdong-Macao In-Depth Cooperation Zone, including Lei Wai Nong, Director of the Executive Committee of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, and Nie Xinping, Director of the Hengqin Office of the Guangdong Provincial People's Government and deputy director of the Executive Committee of the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, attended the press conference.

Background:

Last September, China's central authorities issued a general plan for the Hengqin Zone, indicating that preferential policies concerning corporate income tax would be improved, and measures would be rolled out to attract talent from home and abroad.

On March 9, the Guangdong Provincial Taxation Bureau announced that domestic and overseas talent in Hengqin Zone would not have to pay tax on what exceeds 15% of personal income. The new preferential individual income tax policies cover comprehensive income, operating profits, subsidies, and other labor income for eligible taxpayers.

In June, the Ministry of Finance of China and the State Taxation Administration of China issued a notice to specify qualifications for enterprises in the Hengqin Zone to enjoy tax reductions or exemptions. Enterprises that meet specific requirements are subject to the preferential corporate income tax rate of 15%.

A new edition of the corporate income tax preferential catalog in the Hengqin zone was announced simultaneously, covering nine categories of 150 sub-industries such as integrated circuit design, AI products, and other sectors.

Author: Nan

Editor: Wing, Monica, Jerry