Sep 2022 - Tax preferential policies summary - Small and Micro Enterprises( SMEs)
To help you identify the policies that may be applicable to your business, we listed as below indicating, where necessary, the date of expiry.
Tax / Fee | Policy | Validuntil | How to enjoy | Points of attention |
Value-Added Tax (VAT) | Exemption for small taxpayers | 31 December 2022 | Automatic | ž VAT special invoice cannot be issued on exempted income |
10% / 15% additional VAT input deduction | 31 December 2022 | File an application firstly | ž For VAT general taxpayers only ž Engaging in production or livelihood and life services | |
End-of-period tax credit refund | No date | File an application firstly | ž For VAT general taxpayers only ž Other conditions apply | |
Corporate Income Tax (CIT) | Annual taxable income < 1M, rate = 2.5% 1M < Annual taxable income < 3M, rate = 5% | 31 December 2024 | Automatic | ž If taxable profit exceeds RMB 3M, normal CIT rate (25%) applies to the entire profit |
“Six taxes, Two fees” * | 50% cost reduction | 31 December 2024 | Automatic | ž For VAT small taxpayers and small and micro enterprises |
Educational Surcharge & Local Educational Surcharge | Exemption if monthly turnover ≤ 100k (or quarterly turnover ≤ 300k) | No date | Automatic | ž For VAT small taxpayers and VAT general taxpayers |
Disabled fund | Exemption if staff headcount ≤ 30 | 31 December 2022 | Automatic | ž If headcount exceeds 30 and no disabled employee hired, normal disabled fund calculation applies |
Small and micro enterprises criteria
An enterprise meeting all the following criteria shall be considered as a small and micro enterprise:
- Enterprises engaging in non-restricted and non-prohibited businesses
- Annual taxable income does not exceed RMB 3M
- Headcount does not exceed 300
- Total assets do not exceed RMB 50M
“Six taxes, Two fees” includes the following
- Resource Tax (excl. Water Resource Tax)
- Urban Maintenance and Construction Tax
- House Property Tax
- Urban Land Use Tax
- Stamp Duty (excl. Stock Trading Stamp Duty)
- Arable land use tax
- Educational Surcharge
- Local Educational Surcharge
Should you have questions regarding the potential impact of these measures on you, please reach out to your usual point of contact at Mazars.
References:
- Ministry of Finance and State Administration of Taxation, [2022] No.15: Notice on the exemption of VAT for small-scale taxpayers (link here in Chinese);
- Ministry of Finance and State Administration of Taxation, [2022] No.11: Notice on VAT policy to promote the development of distressed industries in the service sector (link here in Chinese);
- Ministry of Finance and State Administration of Taxation, [2022] No.14: Notice on further Strengthening the implementation of the tax rebate policy of VAT at the end of the period (link here in Chinese);
- 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);
- Ministry of Finance and State Administration of Taxation, [2022] No.10: Notice on further implementing the policy of “ Six taxes and Two fees” for small and micro-sized enterprises (link here in Chinese);
- Ministry of Finance and State Administration of Taxation, [2016] No.12: Notice on Expanding the Scope for Exemption from Certain Governmental Funds(link here in Chinese);
- Ministry of Finance, [2019] No.98: Notice on adjustments to the Policy for the Levy of Employment Security Funds for the Disabled(link here in Chinese).
