ECONOMY

China Unveils Tax Breaks to Encourage Foreign Companies to Reinvest

Published: Jul. 2, 2025 4:21 a.m. GMT+8, Updated: Jul. 2, 2025 4:21 a.m.

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The Ministry of Finance issues a joint announcement with the State Taxation Administration, and the Ministry of Commerce on a tax break for foreign companies’ reinvestment of profits earned in the country.

China has rolled out new tax incentives to encourage foreign companies to reinvest profits earned in the country, in its latest move to strengthen foreign direct investment amid economic headwinds.

According to a joint announcement by the Ministry of Finance, the State Taxation Administration, and the Ministry of Commerce, foreign investors who reinvest dividends and other profits earned from Chinese subsidiaries into qualified domestic investments between Jan. 1, 2025, and Dec. 31, 2028, may offset up to 10% of the reinvested amount against their annual tax liability.

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China introduced new tax incentives allowing foreign investors to offset up to 10% of reinvested profits against annual tax liability from 2025 to 2028.
Eligible reinvestments must stay in China for at least five years and target approved industries; early withdrawal cancels benefits.
Reporting, fund transfer, and compliance requirements are outlined to ensure transparency and oversight.

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