CHINA TAXATION-SUMMARY OF PREFERENTIAL TAX POLICIES FOR SMALL LOW-PROFIT ENTERPRISES
Recently, the State Administration of Taxation of the People’s Republic of China issued a series of regulations which provide special preferential tax policies to small low-profit enterprises in order to support the development of small low-profit enterprises. We have hereby summarized these preferential tax policies as below:
1.Application Criteria of Small Low-profit Enterprises
Small Low-profit Enterprises refer to those enterprises that meet the following requirements and do not fall in the restricted and prohibited industries:
(1)Annual taxable income is less than RMB3,000, 000, the number of employees is less than 300, and the total assets are less than RMB50 million.
(2)The number of employees includes the number of employees who establish labour relations with the enterprise and the number of dispatched labourers.
(3)The number of employees and the total assets shall be the average value for each quarter during one calendar year. The calculation formula is as follows:
The average value for each quarter = (beginning of the quarter + end of the quarter) /2
The average value for the whole year = the sum of the average value for each quarter/4
(4)Those enterprises which commence or cease their businesses during the year, the aforesaid related indicators shall be calculated based on its actual operation period.
2.Preferential Policies on Enterprise Income Tax
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Tax Exemption |
The Conditions for Small Low-profit Enterprise |
Regulation |
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25% exemption on the normal chargeable income, and enterprise income tax is charged at 20% |
For the period during 1 January 2019 to 31 December 2021, the part of annual taxable income which is less than RMB1,000,000 (including RMB1,000,000). |
Caishui [2019]No.133
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50% exemption on the normal chargeable income, and enterprise income tax is charged at 20% |
For the period during 1 January 2019 to 31 December 2021, the part of annual taxable income which is more than RMB1,000,000 and less than RMB3,000,000 (including RMB3,000,000). |
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