Everhour tracks project hours and costs, while China profit calculations require tax-exclusive revenue, VAT separation, and correct tax status.
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The practical question is simple: after costs, how much profit does a China project leave before and after income tax? The answer starts with tax-exclusive revenue, because China output VAT is calculated on the sales amount excluding output VAT charged to the customer. A VAT-inclusive customer price must be separated before you compare revenue with costs.
The result matters for pricing, project review, tax estimates, and owner decisions. A company subject to enterprise income tax uses taxable income rules under China's Enterprise Income Tax Law. Sole proprietorships and partnerships sit outside that law, and individual business operation income is taxed under individual income tax at progressive rates from 5% to 35% after deducting costs, expenses, and losses.
For a basic project calculation, use tax-exclusive revenue minus direct project costs to get gross profit. Then separate VAT from profit. China VAT payable for taxable sales activities is output VAT for the current period minus deductible input VAT for the current period, and the main VAT rates for general VAT taxpayers are 13%, 9%, and 6%, with 3% and 5% collection rates for specified cases.
Example: a consulting project bills 50 hours at RMB 480 per hour, producing RMB 24,000 in tax-exclusive revenue. Direct costs are RMB 6,400 for delivery labor, RMB 4,200 for subcontracted support, and RMB 1,400 of allocated overhead, for RMB 12,000 total cost. Gross profit is RMB 12,000. At a 6% output VAT rate with RMB 520 of deductible input VAT, VAT payable is RMB 920, separate from project profit.
Enterprise income tax starts from taxable income, not VAT-inclusive receipts. Enterprise taxable income for each tax year is gross income reduced by untaxed income, tax-exempt income, other deductions, and allowable prior-year losses. Reasonable expenses actually incurred in generating income are deductible, including cost of sales, costs of goods sold, business expenditures, and other production or operating expenditures.
The standard enterprise income tax rate is 25% for resident enterprises and non-resident enterprises with China establishments on effectively connected income. Through December 31, 2027, eligible small and low-profit enterprises use a 5% effective rate, based on taxable income not exceeding RMB 3 million, no more than 300 employees, and assets not exceeding RMB 50 million. A project profit estimate should label which rate assumption it uses.
A one-off calculator is enough when you need a quote check, a quick gross profit review, or a simple tax-exclusive revenue comparison. It works when the project has a short cost list and the VAT rate, input VAT, and income-tax status are already known. Keep the result labeled as a management estimate, not a filed return.
A managed workflow becomes necessary when hours, costs, and approvals change during delivery. Everhour Time Tracking captures task and project hours through timers or manual entries, works inside supported project tools, and feeds approved timesheets, reporting, budgeting, invoicing, and payroll review. China reporting still needs the correct tax and accounting wrapper, including Chinese Accounting Standards for Business Enterprises where they apply.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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Project revenue should be tax-exclusive for the profit calculation. China output VAT is calculated as the sales amount multiplied by the applicable VAT rate, and the sales amount excludes output VAT charged to the customer. Treat VAT as a tax flow, then compare tax-exclusive revenue with deductible costs and project expenses.
A resident enterprise normally uses the 25% enterprise income tax rate on taxable income. An eligible small and low-profit enterprise uses a 5% effective rate through December 31, 2027, if it meets the taxable income, employee, and asset thresholds. Sole proprietorships and partnerships use individual business income tax rules instead.
Input VAT does not reduce project profit in the same way as a direct cost when it is deductible. China VAT payable is output VAT minus deductible input VAT for the current period, with excess input VAT carried forward where output VAT is insufficient. Non-deductible taxes or costs need separate treatment.
Reasonable expenses actually incurred in generating income reduce enterprise taxable income when they qualify as deductions. Implementation guidance includes cost of sales, costs of goods sold, business expenditures, and other production or operating expenditures. Keep supporting records because the profit estimate needs to match the cost category used for tax review.
Mainland Chinese companies report under accounting standards issued by the Ministry of Finance. Domestic public companies must use Chinese Accounting Standards for Business Enterprises, which are national standards substantially converged with IFRS rather than direct IFRS adoption. That distinction matters when management profit reports feed statutory reporting.
Everhour Time Tracking logs task and project hours through one-click timers or manual entries, including tracking inside supported project tools such as Asana, ClickUp, GitHub, Jira, Monday, Notion, Trello, and Basecamp. Admins can approve timesheets, lock completed periods, send reminders, and review hours before billing or payroll handoff.
Track approved hours, lock completed periods, and connect project work to reporting. Everhour gives teams cleaner inputs for profit reviews, budgets, billing, and payroll handoff.
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