In brief
VAT follows sales, individual income tax follows people, corporate income tax follows company profit, and withholding follows certain cross-border payments. Start with the business flow, then identify the taxpayer, rate, invoice and deadline.
The tax map
| Tax | Business flow | Starting question |
|---|---|---|
| VAT | Sales of goods and services | What is the VAT status and transaction type? |
| IIT | Salary and personal income | Is the individual resident and what income is paid? |
| CIT | Company profit | What is taxable profit and is an incentive available? |
| Withholding | Dividends paid abroad | Who receives the payment and does a treaty apply? |
These taxes do not replace one another. One activity can create VAT on the invoice, CIT on the profit, IIT on employee remuneration and withholding when dividends are distributed.
VAT: determine status before applying a rate
The first distinction is between general and small-scale taxpayers. It affects calculation, invoicing and input VAT treatment. General rates shown are 13%, 9%, 6% and 0% depending on the transaction. The small-scale levy rate is 3%, with a stated reduction to 1% until the end of 2027.
| Subject | What to confirm |
|---|---|
| Status | General or small-scale taxpayer |
| Transaction | Goods, services, export or another category |
| Invoice | Fapiao required by the customer and accounting treatment |
| Input VAT | Eligible evidence and purchase reconciliation |
Monthly sales of RMB 100,000 and quarterly sales of RMB 300,000 are stated as small-scale exemption thresholds. Confirm application to the actual period, transactions and current rules.
Simple example
The output rate alone does not show the company's VAT cost. You also need to know whether input VAT on purchases is creditable and whether the invoices received support that credit.
IIT: the person's status changes the calculation
The 183-day test is central to resident and non-resident classification, but it should not be used alone. Presence, income type, income source and the individual's facts need to be considered together.
- Resident comprehensive income: progressive rates from 3% to 45%.
- Business income: rates from 5% to 35%.
- Certain other income categories: 20%.
- The employer needs a process for withholding, filing and remuneration evidence.
CIT: the rate applies to taxable profit
The standard rate shown is 25%. It applies to taxable profit, not directly to turnover. Preferential treatment may include a 15% rate for qualifying high-and-new-technology enterprises and an effective 5% burden for qualifying small and low-profit enterprises through 2027 under the stated policy.
- Confirm eligibility before budgeting a preferential rate.
- Document costs, contracts and invoices supporting deductions.
- Reconcile accounting profit with taxable profit.
- Keep qualification evidence throughout the incentive period.
Dividends: withholding depends on the recipient
Qualifying dividends between resident enterprises may be exempt. A dividend paid by a Chinese company to a non-resident enterprise is shown with a 10% withholding rate. A treaty may reduce it only when its conditions and evidence requirements are met.
Before distribution
Review tax residence, beneficial ownership and treaty documents before payment. Treaty relief is not automatic merely because the shareholder is registered in a treaty jurisdiction.
Build a usable tax calendar
Several obligations refer to filing or payment periods of 15 days. A useful calendar connects each date to an owner, required data and review step rather than listing deadlines alone.
- List the taxes and filings that actually apply.
- Record the frequency and authority for each obligation.
- Set an internal data cut-off before the legal deadline.
- Assign preparation, review and payment responsibilities.
- Store the filing, payment proof and calculation support together.
Common mistakes
- Applying a rate without checking taxpayer status.
- Confusing turnover, accounting profit and taxable profit.
- Budgeting an incentive before confirming eligibility.
- Treating treaty relief as automatic.
- Relying on one person without a shared calendar and evidence archive.