Beijing, Jan. 2 (reporter Bei Mengyuan) The Ministry of Finance and the State Administration of Taxation have recently issued a notice concerning the improvement of the tax credit for enterprises' overseas income tax credit (hereinafter referred to as the notice), it is clear that based on the current sub regional (partial) credit exemption method, we should increase the comprehensive credit method that does not separate the national (regional) points, and appropriately expand the credit rating level, so as to further promote the combination of foreign investment and foreign investment.
It is understood that the current foreign income tax credit policy allows the income tax paid by the enterprises outside the enterprise to reduce the amount of tax payable in a certain limit. Specifically, the subnational tax credit method is adopted, and the tax credit level for the income tax paid by Chinese enterprises abroad cannot exceed three levels.
Since its implementation in 2008, the policy has played an active role in encouraging Chinese enterprises to "go out". However, with the implementation of One Belt And One Road strategy and the increasing overseas investment of Chinese enterprises, it is difficult to fully adapt to the new development situation.
According to the notice issued, the enterprises will choose to calculate their taxable income from abroad separately according to the country's (region). Once selected, no change is allowed within 5 years.
At the same time, in view of the need for Chinese enterprises to set up intermediate enterprises in overseas investment in recent years, the limitation of the current credit does not exceed three levels. It is difficult to fully adapt to the actual situation of "going global". The notice will expand the credit rating from three to five levels.
The head of the Ministry of Finance and the State Administration of Taxation said that this will help balance the tax burden among different countries and regions, increase the tax credit of enterprises, and effectively reduce the overall tax burden of overseas businesses.