China Implements Tax Credit Policy to Boost Foreign Investment

On July 14, 2025, China's Ministry of Commerce issued the Notice on Implementing the Tax Credit Policy for Foreign Investors Using Distributed Profits for Direct Investment. The policy, effective immediately, offers tax credits to foreign investors reinvesting distributed profits in China, aiming to stimulate increased foreign direct investment and foster economic growth.

The notice outlines key measures, including establishing robust implementation mechanisms, ensuring thorough review processes, and providing comprehensive policy consultation services. It also emphasizes enhanced supervision and continuous tracking of the policy’s effectiveness to ensure its success.

This initiative aligns with China’s broader economic strategy, as evidenced by the country’s 5.3% GDP growth in the first half of 2025, driven significantly by consumption and investment. The policy is expected to further strengthen China’s appeal as a global investment hub, particularly in cities like Shanghai, which recently recognized 30 new regional headquarters and 15 foreign-funded R&D centers.

(Source: Ministry of Commerce)