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Circular of the General Office of the Ministry of Commerce on Effectively Implementing the Tax Credit Policy for Direct Reinvestment by Foreign Investors Using Distributed Profits

Shang Ban Zi Han No. [2025] 380

July 14, 2025

To the commerce departments of provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the State plan; the commerce department of the Xinjiang Production and Construction Corps; and the Sichuan Provincial Bureau of Economic Cooperation,

To implement the decisions and directives of the CPC Central Committee and the State Council, encourage overseas investors to increase investment in China, and promote more effective investments, the Ministry of Finance, the State Taxation Administration, and the Ministry of Commerce, with the approval of the State Council, have issued the Announcement on the Tax Credit Policy for Direct Reinvestment by Overseas Investors Using Distributed Profits (the "Announcement"). All local commerce authorities shall fully recognize the significance of leveraging tax incentives to stimulate overseas investors to expand investment in China through profit reinvestment, which plays a crucial role in stabilizing investment expectations and reducing investment costs, and shall gain a thorough understanding of the policy’s intent, accurately grasp policy requirements, and ensure proper implementation of the policy. Upon consultation with the Ministry of Finance (MOF), the State Administration of Taxation, the State Administration for Market Regulation, and the State Administration of Foreign Exchange, the relevant work arrangements are notified as follows:

I. Establish and refine the work mechanism
All provincial-level commerce authorities shall, in conjunction with the finance, tax, foreign exchange and other relevant provincial-level authorities (hereinafter collectively referred to as “relevant authorities”), establish a cross-departmental collaboration mechanism for administration and services relating to the tax credit for overseas investors making direct reinvestment with distributed profits (hereinafter referred to as “tax credit”) and formulate specific work procedures, while strengthening collaboration with market regulatory authorities, fulfill their eligibility review and regulatory responsibilities, and ensure effective information sharing in accordance with Article 6 of the Announcement.

II. Rigorously fulfill review responsibilities
When overseas investors, in accordance with Article 6 of the Announcement, submit information and certificates through the invested enterprise via the Ministry of Commerce’s unified online service system platform (specifically, the "Tax Credit Declaration for Profit Reinvestment" module of the Integrated Management Application for Foreign Investment), the local commerce authority in the locality of the invested enterprise shall check and verify the submitted materials against the relevant foreign investment information report and by referring to the statistical requirements for “Profit Reinvestment.” Once verified, the information shall be submitted via the system to the competent provincial-level commerce authority. The provincial-level commerce authority, in conjunction with relevant authorities, shall review and verify whether the conditions specified in Article 2 of the Announcement are met, and upon verification, issue a Profit Reinvestment Information Form (see Annex 1) to the invested enterprise. If the overseas investor benefiting from the tax credit withdraws the investment and submits the required information under Article 6 of the Announcement, the local commerce authority in the locality of the invested enterprise shall check and verify the information against the relevant foreign investment information report and other relevant information, and upon verification, submit the case to the provincial-level commerce authority for confirmation.

III. Provide policy consultation services
All provincial-level commerce authorities shall, based on actual local conditions, establish policy consultation channels such as inquiry hotlines, government email inboxes, and government official WeChat public accounts, and designate dedicated personnel to respond to issues encountered by applicants during the application process. A Policy Consultation Contact Form (see Annex 2) shall be submitted to the Ministry of Finance (Department of Foreign Investment) by July 25. The contact information will subsequently be published via the MOFCOM’s unified service system platform.

IV. Closely collaborate and strengthen regulation
Local commerce authorities shall strengthen collaboration with relevant authorities to enhance regulatory synergies in tracking and managing overseas investors enjoying the tax credit and the related investments in accordance with the law, and shall establish work logs and keep track of the operations of invested enterprises through information sharing, on-site visits, and other means; in the event of the withdrawal of an investment by an overseas investor, the reasons shall be ascertained, and the investor shall be urged to submit relevant information as required; in the event of any non-compliance with requirements discovered during subsequent management, the matter shall be promptly reported to the tax authority, while providing assistance with tax recovery; in the event of any discovered potential violation of foreign exchange or tax regulations by a foreign-invested enterprise, the matter shall be promptly reported to the foreign exchange or tax authority for handling in accordance with the law.

V. Timely monitor policy effectiveness
All provincial-level commerce authorities shall, in conjunction with relevant authorities, closely monitor the implementation of the tax credit policy, and fully leverage its benefits to stabilize investment expectations and to encourage and support overseas investors to expand their investment in China; shall utilize provincial and relevant local special task teams on foreign investment, roundtable meetings with foreign enterprises, and other mechanisms to gather feedback and suggestions from foreign-invested enterprises and overseas investors regarding policy implementation and related work, and facilitate the resolution of difficulties encountered by them when benefiting from the policy through the cross-department collaboration mechanism for administration and services; and shall summarize policy outcomes and analyze and assess investment trends in a timely manner.

All provincial-level commerce authorities shall report major issues encountered during policy implementation to the Ministry of Commerce (Department of Foreign Investment).