China has introduced a new tax incentive to encourage foreign companies to reinvest profits within the country. This initiative, announced jointly by the Ministry of Finance, the State Taxation Administration, and the Ministry of Commerce, offers a corporate income tax credit of up to 10% of the reinvested amount.
The tax credit is available to foreign investors who reinvest dividends and other profits from Chinese subsidiaries into qualified domestic investments between January 1, 2025, and December 31, 2028. Eligible investments include equity capital increases, the establishment of new resident enterprises, and acquisitions of resident enterprise shares from non-affiliated parties.
This move is part of China's broader strategy to attract foreign capital and strengthen its position in global supply chains. The tax credit aims to restore investor confidence and stimulate economic activity within China.