In order to further support the development of small and micro enterprises and individual industrial and commercial enterprises, the State Administration of Taxation issued preferential policies to improve their business environment on August 2nd, 2023.

From January 1st, 2023 to December 31st, 2027, the individual income tax levied shall be halved on the part of the annual taxable income of no more than CNY 2 million for individual industrial and commercial households, and will still be applicable if other current preferential policies of individual income tax are enjoyed.

Since January 1st, 2023 to December 31st, 2027, VAT small-scale taxpayers, low profit enterprises and individual businesses shall be taxed half on resource tax (excluding water resource tax), urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding securities trading stamp duty), cultivated land occupation tax and additional education fees, local education fees, and will also be still applicable if other current preferential policies of the related tax are enjoyed.

Small-scale taxpayers of value-added tax, small micro-profit enterprises and individual industrial and commercial households that have already enjoyed other preferential policies in accordance with the law, such as resource tax, urban maintenance and construction tax, property tax, urban land-use tax, stamp duty, cultivated land occupation tax, surcharge on education fees and surcharge on local education, etc., shall be eligible to enjoy the preferential policies provided in Article 2 of the Announcement on a stacked basis.

For small enterprises with low profits, the taxable income will be levied at 25%, and the corporate income tax at a rate of 20%, this policy shall be extended until December 31st, 2027.

Small and low-profit enterprises refer to enterprises engaged in the industries that are not restricted or prohibited by the State, and that meet the three conditions of the annual taxable income not exceeding CNY 3 million, the number of employees not exceeding 300 people, and the total assets not exceeding CNY 50 million.

The relevant taxes already collected may be deducted or refunded against the tax payable by the taxpayer in subsequent months. Those who have been cancelled will not enjoy such benefits retroactively.

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