Kashgar Tax Incentives Explained 2026

The Three Pillars of Kashgar Tax Policy

Kashgar offers a unique combination of three overlapping tax incentive programs that can reduce your effective corporate income tax rate from 25% down to near zero during the exemption period.

1. Five Free, Five Half (浜斿厤浜斿噺鍗?

Enterprises in Kashgar's designated difficulty areas enjoy:

• Years 1-5: 100% corporate income tax exemption
• Years 6-10: 50% reduction of the applicable tax rate

This applies to encouraged industries including agri-processing, textiles, electronics assembly, new energy, and logistics.

2. 15% Western Development Rate

Instead of the standard 25% corporate income tax, encouraged industries in Western China pay only 15%. In Kashgar, this means:

• During the "5 Free" period: 0% effective rate
• During the "5 Half" period: 7.5% effective rate (50% of 15%)
• After 10 years: 15% rate may continue if eligible

3. Reinvestment Tax Deferral

Foreign investors who distribute retained earnings and reinvest them in qualifying Kashgar projects can defer the 10% withholding tax on the distributed profits.

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