Business Internet China - A Comparison of China & Indian Tax Incentives

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July 06

A Comparison of China & Indian Tax Incentives

Reproduced with kind permission of China Briefing magazine

Broadly speaking, and taking into account recent reforms, from the January 1, 2008, China’s tax regime will be as follows:

Corporate Income Tax: 25%
Tax Incentives for hi-tech industries: 15%

India’s tax regime is still undergoing reform and further changes are likely. However, at present, in India’s new “Special Economic Zones” (more later on this), India’s tax regime is as follows:
Corporate Income Tax: 40% plus 2.5% surcharge being applicable upon revenues exceeding USD250,000 per annum.

First five years of profitability: 0% tax
Second five years of profitability: 50% of tax rate
Third five years of profitability: 50% of tax rate for any invested dividends back into India.

As can be seen, India has introduced an aggressive tax regime to attract foreign direct investment, at rates that compare extremely well with China's, even considering India's higher corporate tax base rate.