According to the Enterprise Income Tax Law and the Individual Income Tax Law and other relevant laws and regulations: enterprises established in China by law, including enterprises, institutions, social organizations and other organizations that obtain income in accordance with China's laws and administrative regulations established in China, shall pay enterprise income tax in accordance with law. However, sole proprietorship enterprises, partnership enterprises, and individual industrial and commercial households established in accordance with Chinese laws and administrative regulations shall not pay enterprise income tax and shall pay individual income tax.

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Whole-proprietorship enterprise refers to a business entity established within the territory of China, which is invested by a natural person, the property is owned by the investor personally, and the investor bears unlimited joint and several liability for the debts of the enterprise with his personal property. The business income is also the personal income of the investor and pay personal income tax, the enterprise itself does not have independent property and income, so it is not a taxpayer of enterprise income tax. Article 2 of the Law of the People's Republic of China on Individually Owned Enterprises stipulates that whosoever is established in accordance with the laws and administrative regulations of the People's Republic of China as an individually owned enterprise or a partnership shall not be subject to the enterprise income tax.

Partnerships are general partnerships and limited partnerships established in China by natural persons, legal persons and other organizations in accordance with this Law. According to the Circular of the Ministry of Finance and the State Administration of Taxation on the Income Tax Issues of Partners of Partnership Enterprises (Cai Shui [2008] No. 159): "A partnership enterprise shall take each partner as the person liable for tax. If the partners of a partnership enterprise are natural persons, they pay individual income tax; if the partners are legal persons and other organizations, they pay enterprise income tax."

Individual industrial and commercial households, according to the "Individual Industrial and Commercial Households Individual Income Tax Calculation Measures" (State Administration of Taxation Decree No. 35), Article 4: " Individual industrial and commercial households take the owners as the taxpayers of individual income tax." Therefore, individual business households do not pay enterprise income tax.