The effects of the Tax Preferential Policy in China

In order to further stabilize market expectations, boost market confidence, and stimulate market growth, the Chinese government has implemented a series of tax preferential policies. 

The current effective tax preferential policies target small and micro profit enterprises that have just entered the Chinese market. The following policies are valid until December 31, 2027.

1. For VAT small scale taxpayers, if monthly sales are below RMB 100,000, or below RMB 300,000 for quarterly VAT declaration, VAT is exempt.
2. For small scale VAT taxpayers who are subject to 3% tax rate on their taxable sales revenue, the tax rate shall be reduced to 1%; for pre-paid VAT projects with 3% pre-tax rate, a 1% pre tax rate shall be applied for pre-paid VAT.
3. Small scale VAT taxpayers, small and micro profit enterprises, and individual businesses will be subject to a 50% reduction in resource tax (excluding water resource tax), urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding securities transaction stamp duty), farmland occupation tax, education surcharge and local education surcharge. Taxpayers who pay taxes on a monthly basis and where monthly sales do not exceed RMB 100,000, or those who pay taxes on a quarterly basis and whose quarterly sales do not exceed RMB 300,000, are exempt from education surcharges, local education surcharges, and water conservancy construction funds.
4. For small and micro profit enterprises, the taxable income on CIT shall be calculated at a reduced rate of 25%, and the tax rate shall be 20%.
5. Enterprises that purchase equipment and appliances from January 1, 2018, to December 31, 2027, with a unit cost not exceeding RMB 500,000, can record these as immediate current cost expenses and deduct them when calculating taxable income for Corporate Income Tax (CIT).

For more information contact Vivian Liu or Sophie Tian.

Further reading:

An update on Tax Changes in China

About Lee & Lee Associates:

Lee & Lee Associates is AGA's representative accounting, audit and tax firm in Beijing, dedicated to providing high quality services in accounting, audit, tax, financial due diligence, investment consulting, and business establishment. Clients represent foreign companies, joint ventures, wholly foreign owned enterprises, representative offices, and foreign individuals.

All professionals have experience of working for international accounting firms, multinational enterprises, fast-growing small and medium-sized companies and tax authorities. All partners are also Chinese Certified Public Accountants with over 10 years of working experience. Several are members of the Association of Chartered Certified Accountants (ACCA, UK), are Chinese Certified Tax Accountants and  Certified Internal Auditors and attorneys at law.