From the year they begin making a profit, foreign-funded production enterprises with a business term of more than ten years will be exempt from paying corporate income tax for two years, and will have their corporate income tax halved for the following three years.

However, preferential policies for foreign-funded enterprises engaged in the exploitation of resources such as petroleum, natural gas, rare metals, and noble metals will be different, as decided by the State Council. If a foreign enterprise has been operating for less than 10 years, corporate income tax that it had previously been exempt from should be paid.

After the end of the legally-specified tax exemption and reduction period, foreign-funded enterprises engaged in agriculture, forestry, and livestock husbandry, as well as the foreign-funded enterprises established in economically-undeveloped remote areas, may have their corporate income tax decreased by 15 to 30 percent for a period of 10 years with the approval of the tax administration department under the State Council,

Foreign-funded technically-advanced enterprises will be exempt from corporate income tax for two years and have their corporate income tax halved for the following six years.

Any year after the expiration of the tax exemption and reduction period, an enterprise that exports its products may get its corporate income tax halved if its export revenue accounts for at least 70 percent of its total revenue.

If a foreign-funded enterprise or a subsidiary set up by a foreign enterprise in China incurs a loss one year, it can use income from subsequent years to cover the loss; if the income realized in the next taxable year is not enough to cover the loss, the income realized in subsequent years (no more than five years) may also be used to cover the loss.

For foreign investment manufacturing enterprises that have been operating for over 10 years, it will be exempt from corporate income tax for the first two years in which it makes a profit, and will have the tax halved for the following three years, except for those involved in oil, natural gas, rare metals, and noble metals exploration projects, which will be decided by the State Council. Foreign investment enterprises that operate for less than 10 years must pay all corporate income tax they were previously exempt from.

Foreign investment enterprises engaged in the agricultural, forestry, and livestock industries and located in under-developed remote areas can apply for 15 to 30 percent tax reductions upon approval by the taxation administration department of the State Council for a period of 10 years following the duly exemption and abatement periods.

Advanced foreign-funded technical enterprises will be exempt from corporate income tax for two years and receive a 50 percent reduction for the following six years.

For export-oriented manufacturing enterprises, if the value of their exported products accounts for 70 percent or more of their total annual output value, then they will receive a 50 percent reduction in corporate income tax indefinitely after the duly exemption and abatement periods.

Losses incurred in a single tax year by a foreign investment enterprise, production site, or business in China may be made up by income from the following tax year. Should the income of the following tax year be insufficient to make up for the loss, the balance may be made up through income from the subsequent year, and so on, over a period not exceeding five years.