As an entrepreneur, understanding the current tax types in China is a crucial part of business preparation. Taxation is not only the legal cost of business operation, but also an important factor affecting the profitability of enterprises. This article comprehensively reviews the current tax system in China, helping you establish a tax awareness at the beginning of your business venture, accurately assess the cost of starting a business, and recognize that taxes are an inevitable legal expense.

       As of now, there are a total of 18 types of taxes in China (excluding Hong Kong, Macao and Taiwan). According to the different objects of taxation, they can be classified into five major categories:

       Turnover taxes: the taxable object is the turnover amount of goods or services;

       income tax: the taxable object is the taxpayer's income;

       property tax: the taxable object is the property owned or controlled by the taxpayer;

       resource tax category: Natural resources are the objects of taxation

       behavior tax category: Specific behaviors are the objects of taxation

       Special note: In China, regardless of the size of the enterprise, all business operations must fulfill tax obligations in accordance with the law. Understanding tax types is the first step in compliant operation and a key link in cost control.

Turnover tax category:

       Turnover tax category is a type of tax levied on the value-added amount or quantity of goods in the production and circulation links, as well as the business turnover of providing services. This type of tax usually has the characteristics of a wide range of tax sources and widespread collection.

Income tax

       Income tax is a type of tax that takes the income amount obtained by a unit or individual within a certain period as the taxable object. This type of tax is directly related to the profitability of taxpayers.

Property tax

       Property tax is a type of tax that takes the property owned or controlled by taxpayers as the object of taxation. This type of tax usually has the characteristic of strong stability.

Resource tax

Resource tax is a type of tax that takes natural resources as its taxable object. This type of tax has the function of regulating the differential income of resources and promoting the rational utilization of resources.

Behavior tax

Behavior tax is a type of tax that takes specific behaviors as the objects of taxation. This type of tax has specific purposes and flexibility.

Tax Implications for Entrepreneurs

       Legal and Interim Regulations Explanation: Laws: Formulated by the National People's Congress or its Standing Committee, they have relatively high legal effect. Interim Regulations: Formulated by The State Council, they belong to administrative regulations and have legal effect before the relevant laws are promulgated. Currently, the process of tax legislation in China is accelerating, and many tax types have been elevated from "interim regulations" to formal laws.

       As an entrepreneur, understanding the above-mentioned tax types is crucial for your business planning: Tax compliance is the bottom line: All enterprises must fulfill their tax obligations in accordance with the law, and tax evasion and tax fraud will face severe penalties. Taxation is an important cost: Tax expenditure is an important part of the operating costs of enterprises and should be included in the financial planning at the early stage of entrepreneurship. There are differences in industry tax burdens: The main types of taxes and tax burdens involved in different industries vary, which should be taken into account as a factor when choosing a business direction. Preferential policies can be utilized: The state offers many tax preferences for small and micro enterprises, high-tech enterprises, etc. Legal utilization can reduce the tax burden

       It is recommended that entrepreneurs consult professional financial and tax advisors before company registration to comprehensively assess the tax costs of the entrepreneurial project and establish a standardized financial management system, laying a solid foundation for the long-term development of the enterprise.