In 2026, China continues to expand high-standard opening-up and deepen the reform of the foreign investment promotion system and mechanism. Focusing on the core needs of foreigners doing business in China, it has launched a series of targeted tax preference policies. Among them, small and micro enterprises, enterprises in free trade zones, and high-tech enterprises are key support targets, enjoying multiple tax reductions, tax rate preferences and declaration conveniences, effectively reducing the operating costs of foreign investors and helping them develop efficiently and in compliance. This article compiles a minimalist preference list specifically for foreign travelers, abandoning redundant policy expressions, clarifying preference contents, applicable conditions and declaration key points, allowing foreign business operators to quickly understand policy dividends and accurately enjoy corresponding preferences.
In 2026, for foreigners doing business in China, the tax preference policies show three characteristics: “precision, inclusiveness and convenience”, focusing on the two main taxes of Corporate Income Tax (CIT) and Value-Added Tax (VAT), supplemented by personal income tax preferences, covering the entire business cycle. China’s Ministry of Commerce clearly stated that it will implement policies such as tax credits for foreign investors reinvesting profits obtained in China, fully guarantee national treatment for foreign-funded enterprises, and ensure that foreign business operators “enjoy all eligible preferences and declare conveniently” without worrying about cumbersome policy implementation and complex processes.
I. Tax Preferences for Small and Micro Enterprises (First Choice for Foreign Entrepreneurship, Inclusive Coverage)
In 2026, China continues and upgrades inclusive tax preferences for small and micro enterprises established by foreigners doing business in China, greatly reducing the tax costs of initial and small-scale operations. The scope of application includes individual industrial and commercial households and small and micro profitable enterprises (including wholly foreign-owned and Sino-foreign joint-venture small enterprises). No complex qualification review is required, and those who meet the conditions can automatically enjoy the preferences.
Core Preference Contents: 1. Corporate Income Tax Preference: For small and micro profitable enterprises established by foreigners, if the annual taxable income does not exceed 3 million RMB, the CIT will be paid at an effective tax rate of 5% (standard tax rate is 25%, with a preference intensity of 80%). This policy is extended to December 31, 2027, covering most foreign initial enterprises; 2. Value-Added Tax Preference: Small-scale taxpayers (with annual taxable sales volume of 5 million RMB or less) apply a 1% collection rate (reduced from the original 3%, with the phased preference extended). Those with quarterly sales volume of less than 300,000 RMB are exempt from VAT and do not need to pay additional taxes and fees (urban maintenance and construction tax, education surcharge, etc.); 3. Reduction and Exemption of Additional Taxes and Fees: Small-scale VAT taxpayers enjoy a 50% reduction in urban maintenance and construction tax, education surcharge and local education surcharge, further reducing the comprehensive tax burden; 4. Stamp Duty Preference: Those who sign taxable documents such as purchase and sale contracts and lease contracts enjoy a 50% reduction in stamp duty, and small-scale operations can be exempt from stamp duty.
Applicable Conditions (Minimalist Identification): The number of employees of the enterprise does not exceed 300, the total assets do not exceed 50 million RMB, the annual taxable income does not exceed 3 million RMB, and it is engaged in industries not restricted or prohibited by the state. Whether it is wholly foreign-owned or not, it can enjoy the preferences. Foreign individual industrial and commercial households automatically enjoy VAT and additional tax preferences with reference to small-scale taxpayers, without additional declaration.
Declaration Key Points: No advance application is required. When filing quarterly and annual tax returns, check the relevant options of “small and micro profitable enterprises” and “small-scale taxpayers” through the electronic tax bureau (supporting English interface), and the system will automatically calculate the reduced and exempted tax amount without submitting additional supporting materials. The declaration process is the same as that of ordinary enterprises, and the tax department provides multilingual consulting services to assist in solving declaration doubts.
II. Tax Preferences for Enterprises in Free Trade Zones (Key Support for Cross-Border Operations, Concentrated Policy Dividends)
In 2026, China fully and in-depth implements the strategy of upgrading free trade pilot zones. Major free trade zones in China (including Hainan Free Trade Port) such as Shanghai, Guangdong and Hainan have launched exclusive tax preference policies for enterprises invested by foreigners, focusing on fields such as cross-border trade, service industry opening-up and high-end manufacturing. Combined with national general preferences, they form “double dividends”, which are especially suitable for foreign investors with cross-border business and long-term operation plans.
Core Preference Contents (Regional Focus): 1. Exclusive Preferences for Hainan Free Trade Port: Enterprises established by foreigners apply a 15% CIT rate for all industries (except the negative list), which needs to meet the requirement of “substantive operation” (personnel, finances and assets are all in Hainan); For high-end foreign talents, the part of personal income tax exceeding 15% is exempted, and the scope of application is expanded to special industries such as aviation and offshore oil and gas; The number of zero-tariff import items is expanded to 6,600 (accounting for 74% of all commodities), including production equipment and means of transportation. Products with processing value-added ≥30% sold to the mainland are exempt from tariffs; Overseas income can enjoy tax exemption preferences. 2. Preferences for Other Free Trade Zones (Shanghai, Guangdong, etc.): Enterprises in encouraged industries (such as high-end manufacturing, modern services and cross-border trade) pay CIT at a reduced rate of 15%; Taxable income from cross-border service trade is exempt from CIT; Dividends and bonuses obtained by foreigners from enterprises in free trade zones are temporarily exempt from personal income tax (subject to tax treaty requirements); Import tariffs on R&D equipment are reduced or exempted to reduce enterprise R&D costs.
Applicable Conditions: The enterprise’s registered address is within the free trade zone, the actual business address is consistent with the registered address, and it is engaged in encouraged industries in the free trade zone (you can query the list of encouraged industries in the local free trade zone). Enterprises in Hainan Free Trade Port need to additionally meet “substantive operation” (at least 1 employee pays social security in Hainan, local bookkeeping and accounting, and core assets are in Hainan).
Declaration Key Points: When registering, the enterprise needs to clearly mark “encouraged industries in the free trade zone”, and submit an industry attribution statement (simply fill in the business scope) when filing quarterly returns. Enterprises in Hainan Free Trade Port need to submit relevant certificates of substantive operation (social security payment records, financial statements, etc.) when filing annual returns, all of which can be submitted online through the electronic tax bureau. The tax department of the free trade zone has set up a special foreign-related service window to provide one-on-one policy guidance and declaration assistance.
III. Tax Preferences for High-Tech Enterprises (First Choice for Technology-Driven Enterprises, Multiple Dividends Combined)
In 2026, China increases its support for high-tech enterprises. High-tech enterprises established by foreigners can enjoy multiple preferences such as “tax rate reduction and exemption + R&D subsidies + additional deduction of R&D expenses”, helping enterprises with technological R&D and transformation and upgrading. They are especially suitable for foreign investors engaged in fields such as scientific and technological R&D, artificial intelligence and biomedicine. Policy dividends can be enjoyed in combination with free trade zone preferences.
Core Preference Contents: 1. Corporate Income Tax Preference: Pay CIT at a reduced rate of 15% (standard tax rate is 25%) with no time limit for continuous enjoyment; 2. Additional Deduction of R&D Expenses: R&D expenses incurred by enterprises in carrying out R&D activities can be additionally deducted 100% before tax. For manufacturing enterprises and technology-based small and medium-sized enterprises, the proportion of additional deduction of R&D expenses is increased to 175%. Overseas R&D expenses can be included in the scope of additional deduction to further reduce taxable income; 3. Value-Added Tax Preference: For selling independently developed high-tech products, the policy of immediate VAT refund upon collection is applicable (the refund rate is up to 100%); Import of R&D equipment is exempt from tariffs and VAT; 4. Other Supporting Preferences: Eligible for R&D center construction subsidies (10%-20% of the investment amount, with a single project ceiling of 5 million RMB). Under bilateral tax treaties, the withholding tax is reduced from 20% to 5%-10%, and the comprehensive tax burden can be reduced to less than 10%; ODI filing for non-sensitive projects enjoys a “green channel” and can be completed within 3 working days.
Applicable Conditions: Enterprises need to obtain the “High-Tech Enterprise Certificate” (jointly recognized by the Ministry of Science and Technology, the Ministry of Finance and the State Taxation Administration). Core products (services) need to meet the requirements of national high-tech fields. The proportion of R&D investment and the proportion of scientific and technological personnel meet the recognition standards (foreign scientific and technological personnel can be included in the total number of scientific and technological personnel), and there are no illegal or irregular business records.
Declaration Key Points: First, apply for high-tech enterprise recognition (there are fixed declaration batches every year, which can be declared through the official website of the Torch Center of the Ministry of Science and Technology, providing English declaration guidelines). After obtaining the certificate, check the “high-tech enterprise” option when filing tax returns, and submit detailed R&D expenses to enjoy additional deduction and tax rate preferences; R&D subsidies and immediate VAT refund upon collection need to be applied separately, and relevant materials can be submitted online through the electronic tax bureau. The tax department provides policy interpretation and declaration guidance to assist foreign investors in handling efficiently.
IV. General Preferences and Declaration Notes (Must-Read for Foreigners)
General Preferences: Foreign investors who reinvest profits obtained in China can enjoy tax credit preferences; Foreigners who obtain wage and salary income from working in China can enjoy tax-free preferences such as housing subsidies and children’s education subsidies (subject to relevant regulations); Eligible foreigners can enjoy preferential policies in tax treaties to avoid double taxation.
Notes: 1. All tax preferences must be based on “compliant operation and truthful declaration”. False declaration and illegal enjoyment of preferences will result in disqualification, repayment of taxes and fines; 2. Preferential policies can be enjoyed in combination (for example, high-tech enterprises in free trade zones can enjoy 15% CIT rate + additional deduction of R&D expenses + cross-border preferences in free trade zones at the same time); 3. There are minor adjustments to the policies in 2026. It is recommended that foreign investors regularly pay attention to the official website of the State Taxation Administration (English interface) or consult local foreign-related tax service institutions to keep abreast of the latest preferential dynamics; 4. When handling relevant declarations, translated versions of materials need to be stamped with the seal of a translation agency to ensure the authenticity and compliance of materials.
Summary: In 2026, for foreigners doing business in China, the tax preference policies are targeted and easy to implement. Small and micro enterprises can enjoy inclusive reductions to reduce initial costs; Enterprises in free trade zones can rely on regional advantages to enjoy exclusive dividends for cross-border operations; High-tech enterprises can rely on technological advantages to enjoy multiple support policies. As long as you clarify your business type, meet the applicable conditions, and declare truthfully, you can easily enjoy policy dividends, reduce the comprehensive tax burden, and help your business develop steadily in China. If you have specific declaration doubts, you can consult the foreign-related service window of the local tax bureau or a professional foreign-related tax institution.
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