China’s finance, taxation, and commerce authorities on Monday unveiled a tax incentive granting foreign investors a 10 per cent corporate income tax credit on direct domestic investments funded by dividends from Chinese resident companies.

The measure, which takes effect from January 1, 2025, through December 31, 2028, allows unused credits to be carried forward and applies lower rates under existing tax treaties.

Eligible investors may reinvest dividends in equity capital increases, new resident enterprise establishments, or acquisitions of resident enterprise shares from non-affiliated parties.

The industries or sectors in which the invested enterprise operates must be listed in the Catalogue of Encouraged Industries for Foreign Investment.

Investors can apply retroactively for qualifying reinvestments made between January 1, 2025, and the policy’s announcement date.