The Chinese central government has announced large-scale tax cuts for small businesses, in a bid to stabilise growth and spur private sector development amidst economic uncertainty.
The Ministry of Finance (MOF) and the State Taxation Administration (STA) recently confirmed the further provision of preferential income tax policies for micro-and-small enterprises (MSE).
Under the policies during the period from 1 January 2022 to 31 December 2024 MSE’s with annual taxable income of between 1 million and 3 million yuan will enjoy a 25% reduction in their taxable income amount, while their enterprise income tax will be levied at a rate of 20%.
In order to qualify as MSE’s for the preferential tax policies, Chinese businesses must have taxable income of not more than 3 million yuan, employ no more than 300 staff, and have assets of no more than 50 million yuan.
“Micro-and-small enterprises are a major force in the national economy and social development,” said the Chinese Communist Party’s (CCP) People’s Daily.
“They play a major role in expanding employment and improving living standards, and their development condition is inseparable from China’s employment and stable economic and social functioning.”