Shanghai has seen a significant rise in foreign-invested tax-related business entities since the start of China's 14th Five-Year Plan (2021-25), with the number of such entities increasing by about 18 percent compared to 2020, according to the Shanghai Municipal Tax Service of the State Taxation Administration.

This growth is largely driven by targeted tax incentives that have been rolled out since the beginning of the plan. By the end of July this year, foreign-funded enterprises in Shanghai had over 114 billion yuan ($15.98 billion) in profits accessing tax incentives designed to encourage profit reinvestment and boost investor enthusiasm.

In response to China's new tax credit policy encouraging foreign investors to reinvest their profits domestically, Shanghai's tax authorities have actively facilitated implementation. Dedicated teams have been set up to support over 1,000 key foreign-invested projects.

A notable example is Toyota Motor Corporation's Lexus new energy vehicle project in Shanghai, with a total investment exceeding 14 billion yuan. This project progressed from contract signing to construction commencement in just over two months, showcasing the remarkable "Shanghai speed".

Initially, Lexus Electrified Shanghai Co Ltd faced challenges with the complexities of land transfer fees and the way of payment. To address these concerns, the tax authorities assembled expert teams to provide one-on-one guidance, streamline processes, and assist in signing agreements.

This support ensured the smooth payment of 1.35 billion yuan in land transfer fees and helped the company file and pay over 40 million yuan in related taxes, including deed and stamp taxes.

The Shanghai tax department has pioneered a "finance-planning-tax" tripartite consultation mechanism to support major projects, offering precise operational guidance from investment entry to operation management.

This approach enabled Lexus Electrified Shanghai to enjoy deferred tax arrangements on 5.19 billion yuan of investment from its parent company, achieving full-cycle support from contract signing to tax payment.

Source: People's Daily