Standardized Tax Classification Codes Governing Cross Border Software Licensing
Cross-border software licenses require exact 19-digit tax classification code matching to clear bank remittance and tax withholding queues in China.
EIT Law Article 27
Meaning
Statutory provision in the Enterprise Income Tax Law of the People’s Republic of China outlines specific tax exemptions and reductions for income derived from agriculture, forestry, animal husbandry and fishery projects. This eit law article 27 is designed to support the development of primary industries and promote rural economic growth through fiscal incentives. It provides a full exemption from corporate income tax for certain basic agricultural activities and a fifty percent reduction for more advanced or industrial agriculture.
The provision also covers income from major infrastructure projects supported by the state and income from environmental protection and water conservation efforts. Entities must meet specific criteria regarding the nature of their projects and their registration status to qualify for these benefits.
Statutory Exemption
Enterprises engaged in the cultivation of grain, oilseeds, vegetables and medicinal herbs are entitled to a complete waiver of income tax on those earnings. Under eit law article 27 the exemption applies to the initial production phase of agricultural products. This includes the breeding of livestock and poultry as well as the capture and farming of aquatic products.
The goal is to lower the cost of production for basic food items and improve the livelihoods of rural producers. To claim this exemption, companies must maintain separate accounts for their agricultural income and ensure that their activities fall within the approved list of categories.
Agriculture Deduction
Income from the cultivation of flowers, tea and other beverage crops as well as spice crops receives a fifty percent reduction in the applicable tax rate. According to eit law article 27 the tax burden is halved to encourage the diversification of agricultural production into high value crops. This reduction also applies to marine aquaculture and inland aquaculture activities.
These projects often require higher capital investment and involve greater market risks than traditional grain farming. The reduced tax rate helps to attract private investment into these sectors and supports the modernization of agricultural techniques.
Environmental Incentive
Projects related to the conservation of energy, the protection of the environment and the development of water resources are granted specific tax holidays. Implementation of eit law article 27 provides a three year exemption followed by a three year fifty percent reduction for income from these activities. This tax holiday begins from the first year the project generates production or business income.
Examples include sewage treatment, garbage disposal and the desalination of seawater. These incentives are part of a broader national strategy to transition to a green economy and reduce the ecological footprint of industrial growth. Companies participating in these projects must obtain the necessary environmental permits and meet technical standards set by the relevant ministries.
The tax benefits are subject to periodic review by the tax authorities to ensure that the projects continue to meet the eligibility requirements. Failure to maintain the required standards can lead to the withdrawal of the incentive and the recovery of previously exempted taxes. Foreign invested enterprises are equally eligible for these benefits provided they fulfill the same operational conditions as domestic firms.
This equality of treatment is a core principle of the modern tax regime for corporate entities in China.