China Aoxing Pharmaceutical Company, Inc., a pharmaceutical company based in China that specializes in analgesics and pain management products, including Oxycodone, Pholcodine, Naloxone, and Tilidine, has said that the company's operating subsidiary, Hebei Aoxing Pharmaceutical Group Co. Ltd. ("Hebei Aoxing"), has been approved to be eligible for preferential enterprise income tax treatments by the relevant tax bureau of People's Republic of China (PRC).
Under the PRC Enterprise Income Taxation Law (the "EIT Law"), Hebei Aoxing is classified as a foreign-invested enterprise, or FIE, in the business of manufacturing medicines. The company is confirmed to enjoy certain income tax treatments, including a flat tax rate of 15% for five years after it becomes a profitable company, potentially starting from year 2008 with increased sales and new product launches.
A flat tax rate of 15% for five years granted to Hebei Aoxing is significantly lower than the uniform tax rate of 25%, effective January 1, 2008 for all enterprises (including FIEs) under the PRC EIT Law, which was enacted on March 16, 2007. For FIEs established before the promulgation of the EIT Law, a five-year transition period is provided during which reduced rates will apply but gradually be phased out.