Substantial Operation Requirements for Hengqin Preferential CIT
According to the Circular on the Preferential Corporate Income Tax Policy for Guangdong-Macao In-Depth Cooperation Zone in Hengqin (Caishui [2022] No.19), enterprises registered in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (hereinafter referred to as the Zone) may enjoy a reduced corporate income tax (CIT) rate of 15%, provided that their main business are listed in the Catalogue of Preferential Corporate Income Tax for Guangdong-Macao In-Depth Cooperation Zone in Hengqin (2021 edition) and they have substantial operations in the Zone.
On 14 February 2023, the Tax Bureau, Finance Bureau, Commercial Service Bureau, Economic Development Bureau and Financial Development Bureau of the Zone jointly issued an Announcement on the Substantial Operation of Qualified Industries and Enterprises in the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, which clarifies the specific requirements for the substantial operation in the Zone. The details are as follows:
- Production and Operation in the Zone
(1)
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The enterprise shall have a fixed production and operation promises and necessary production and operation equipment and facilities in the Zone, and the main production and operation promises is located in the Zone, or the organization that exercises substantial and comprehensive management and control over the production and operation is based in the Zone.
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(2)
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The enterprise shall conclude relevant contracts in the name of the enterprise.
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- Personnel in the Zone
(1)
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The employees who meet the production and operation needs actually work in the Zone, and their wages and salaries are paid through the bank account opened by the enterprise in the Zone. |
(2)
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According to the size of the enterprise and the number of its employees, the enterprise shall have at least 3 to 30 employees who pay social insurance such as basic pension insurance for at least six months in the Zone in a tax year. |
- Finance in the Zone
(1)
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The accounting documents, accounting books, financial statements and other accounting archives of the enterprise are kept in the Zone. |
(2)
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The enterprise’s basic deposit account and bank account for main business settlement are opened in the Zone. |
- Property in the Zone
The property that the enterprise has the ownership or right of use is actually used in the Zone or the organization that exercises substantial and comprehensive management and control over the property is based in the Zone, and the property shall match the production and operation of the enterprise.
An enterprise cannot enjoy the preferential corporate income tax policy if it is registered in the Zone only. If the enterprise’s production and operation, personnel, finance, property etc. are not in the Zone, it will not be considered to have substantial operations in the Zone.
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