July 26, 2010

China to grant tax preference to "company + farmers" enterprises

China will give corporate income tax exemption and reduction to farming enterprises on "company + farmers" operation mode, said the State Administration of Taxation (SAT) in a document released recently.

"Company + farmers" operation mode refers to companies that have signed contracts with farmers on livestock and poultry breeding and provided them with young livestock or poultry, feed, veterinary drugs and vaccines.

Considering that such companies bear marketing, management, procurement, and sales risks and the relation between the companies and farmers is that of labor service outsourcing, SAT, China's tax authority, decided to exempt and reduce the companies from corporate income tax in accordance with the Implementation Rules on the Corporate Income Tax Law.