Starting a business in
🇨🇳China
Checked November 9, 2026 · How we score
Corporate tax
25%
Top income tax
45%
Setup from
$2,000
all-in, first year
Time to form
6 weeks
visit usually needed
What is the corporate tax rate in China?
The headline corporate tax rate in China is 25% in 2026, and individuals pay up to 45%. 25% standard corporate income tax. High and new-technology enterprises pay 15%, and small low-profit enterprises with taxable income up to CNY 3 million pay an effective 5%. Dividends paid to non-resident companies carry 10% withholding (lower under treaties).
| Corporate income tax | 25% 25% standard corporate income tax. High and new-technology enterprises pay 15%, and small low-profit enterprises with taxable income up to CNY 3 million pay an effective 5%. Dividends paid to non-resident companies carry 10% withholding (lower under treaties). |
|---|---|
| Personal income tax (top) | 45% Progressive comprehensive-income rates 3% to 45% on annual income above CNY 960,000 for residents. Business income tops out at 35%. Social insurance contributions are mandatory for employees. |
| Tax system | Worldwide income |
| Capital gains tax | 20%Flat 20% on gains from property transfers; gains on listed shares by individuals are currently exempt, and unlisted share gains are taxed at 20%. |
| Dividend withholding (non-residents) | 10% |
| VAT / GST | 13% |
| Social security | Employers pay roughly 30–40% of salary (capped) in social insurance and housing fund, varying by city; employees pay 10–17%. VAT is 13%, with 9% and 6% reduced rates. |
Forming a company in China
| Usual entity | WFOE (wholly foreign-owned enterprise, limited liability company) |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $2,000–$6,000 |
| Annual running cost | $4,000–$12k |
| Time to incorporate | 6 weeks |
| Form remotely as a foreigner | No |
| Local director required | Yes |
| Local address required | Yes |
| Owners on public register | Yes |
| Statutory audit for small companies | Yes |
| Business banking for non-residents | Very hard |
Residency and visas
Foreign founders typically need a Z (work) visa and residence permit sponsored by their own company. The legal representative must be named, and permanent residence ('Green Card') is very hard to obtain.
| Digital nomad visa | No |
|---|---|
| Golden visa | No |
| Ease of residency for founders | 5/5 (1 = easiest) |
Taxes for individuals living in China
Residents are taxed on worldwide income. Foreigners who live in China fewer than six consecutive years can exclude foreign-sourced income paid outside China (the six-year rule), which resets if they leave for 30 days or more.
| Foreign income of residents | Partly taxed |
|---|---|
| Income tax structure | Progressive rates |
| Inheritance / estate tax | 0%China has no inheritance or estate tax; a national property-tax pilot has not been rolled out. |
| Wealth tax | No |
| Annual property tax on your home | No |
| Exit tax when you leave | No |
| When you become tax resident | Resident if you have a domicile in China or live there 183 days or more in a tax year; foreigners under six years are taxed only on China-source income and foreign income paid in China. |
Special tax regimes
High and New Technology Enterprise (HNTE)
15% corporate tax for qualifying tech companies that meet R&D, IP and staff criteria; super-deduction of R&D costs.
Small low-profit enterprise policy
Taxable income up to CNY 3 million is taxed at an effective 5% for qualifying small companies.
Free trade zones and Hainan Free Trade Port
15% corporate and personal tax caps for qualifying companies and talents in Hainan and the Greater Bay Area.
Pros and cons
Why founders pick China
- 25% corporate rate with 15% and 5% preferential rates
- Huge domestic market and supply chain
- Six-year rule helps expatriate individuals
- No inheritance or wealth tax
Watch out for
- Very slow setup with heavy documentation
- Strict capital controls and difficult profit repatriation
- Banking is very difficult for foreign-owned entities
- Legal representative and local address required
- Top personal rate of 45% plus mandatory social insurance
Best for: Manufacturers and sourcing companies operating in China · Technology firms targeting the Chinese market · Foreign investors with long-term in-country presence
China: common questions
Is China a tax haven?
No. China is a normal-tax country: companies pay 25% corporate tax and the top personal income tax rate is 45%. It does offer special regimes for some newcomers, such as High and New Technology Enterprise (HNTE).
What is the corporate tax rate in China?
The corporate tax rate in China is 25%. High-tech enterprises pay 15%, and small low-profit companies with taxable income up to CNY 3 million pay an effective 5%. Dividends paid abroad face 10% withholding unless a treaty reduces it.
How much does it cost to register a company in China?
A WFOE costs roughly USD 2,000–6,000 to set up through an agent, plus a registered address, an audit and a bank account, and takes about 30–60 days. You need a legal representative and a local office lease, and share capital must be paid in within the statutory period.
What is the income tax rate in China?
Residents pay progressive income tax of 3–45% on comprehensive income, with the top rate above CNY 960,000 a year. Dividends, interest and property gains are taxed at a flat 20%.
Does China tax foreign income?
Residents are taxed on worldwide income, but foreigners who have lived in China fewer than six consecutive years generally pay tax only on China-source income and foreign income paid in China.
Can a foreigner own 100% of a company in China?
Yes. A WFOE is 100% foreign-owned in sectors not on the negative list, which restricts some industries such as media and certain services.
Sources
- State Taxation Administration of China
- State Administration for Market Regulation
- PwC Worldwide Tax Summaries – China
Similar countries
Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.