Jan 2023 - CIT preferential policies for SMEs
We wish to remind you that the small and micro enterprises (SMEs) with annual taxable income below CNY 3M shall be taxed at a preferential Corporate Income Tax (CIT) rate, we summarize hereafter the main measures for your information.
Who is concerned?
An enterprise shall meet all the following criteria to be considered as SMEs:
- Enterprises engaging in non-restricted and non-prohibited businesses
- Annual taxable income amount does not exceed RMB 3M
- Headcount does not exceed 300
- Total assets do not exceed RMB 50M
Tax Rate
The progressive rates are presented below:
Annual taxable income (RMB) | Rate (%) | Validity until |
< 1M | 2.5% | 31 December 2022 |
> 1M - < 3M | 5% | 31 December 2024 |
Point of attention
- If the taxable profit exceeds CNY 3M, the normal CIT rate is applicable (25%) to the whole taxable profit, that’s mean the Company cannot enjoy the above preferable rate;
- The preferential tax rate of 2.5% has expired in the end of 2022, but it would apply for annual CIT filling of Y2022.
We will keep you posted if there is further policy announced.
Should you have questions as to how these measures will impact you, please do not hesitate to reach out to your Mazars contact.
References:
Ministry of Finance and State Administration of Taxation, [2022] No. 13: Notice on further implementing the preferential policy on Corporate Income Tax for small and micro-sized enterprises (link here in Chinese).
