The following announcement is made regarding the preferential tax credit policies for direct investment by foreign investors using distributed profits:

• During the period from January 1, 2025 to December 31, 2028, if a foreign investor uses profits distributed by a resident enterprise in China for direct domestic investment that meets the following conditions, it may credit 10% of the investment amount against the tax payable for the current year. Any unused credit in the current year may be carried forward to subsequent years. If the applicable tax treaty rate is lower than 10%, the tax treaty rate shall apply.

1. The profits must be income from equity investment such as dividends derived from the actual distribution of retained earnings by domestic resident enterprises;
2. It includes equity investments such as capital increase, new establishment, and equity acquisition from non-related parties;
3. The industry of the invested enterprise must be within the scope of nationally encouraged industries listed in the Catalogue of Encouraged Industries for Foreign Investment;
4. The foreign investor must continuously hold the investment for at least 60 months;
5. For cash payments, the funds must be directly transferred to the account of the invested enterprise or the equity transferor, without passing through any intermediary accounts; for non-cash payments, the ownership of the assets must be directly transferred to the account of the invested enterprise or the equity transferor, under no circumstances may the assets be held by another party on behalf or be held temporarily.

• The creditable tax payable refers to the corporate income tax payable on dividends, interest, royalties, and other income derived by the foreign investor from the profit-distributing enterprise.
• Tax treatment upon withdrawal of investment:

1. Withdrawal of the investment after 5 years: The profits corresponding to the withdrawn investment shall be declared to the tax authority for payment of deferred taxes within 7 days, and the carried-over balance of the tax credit for re-investment may be used to offset the payable tax;
2. Withdrawal of the investment before 5 years: In addition to paying the deferred taxes, the credit amount shall be reduced in proportion. If the used amount exceeds the reduced amount, the difference shall be paid within 7 days;
3. Withdrawal involving both eligible and non-eligible investments: The withdrawal shall be deemed to first apply to investments that have enjoyed the preferential policy.

• When a foreign investor applies for enjoying this policy or withdraws the investment, it shall submit relevant documents to the local competent commerce department through the invested enterprise.
• Foreign investors with remaining tax credit balances under this policy as of December 31, 2028 may continue to utilize such credits until fully utilized.

Qualifying investments made from January 1, 2025 to the date of issuance of this Announcement may apply for retroactive enjoyment of the policy.