Small and micro businesses
Corporate income tax
The corporate income tax rate was reduced from 10 percent to 5 percent for small and micro-businesses. The tax rate is applied to the profit portion from 1 million RMB to 3 million RMB.
Reduction and exemption of six taxes and two fees
Six taxes and two fees for small and micro enterprises and individual businesses will be reduced within 50% of the tax amount (taxes include resource tax, urban maintenance, and construction tax, real estate tax, urban land use tax, stamp duty excluding stamp duty on securities transactions, arable land occupation tax and education fee surcharge, and local education surcharge within 50% of the tax amount)
The percentage rate will be implemented by the local provincial or municipal government; therefore the rate may vary.
Small and micro enterprises are defined as the following:
- Engaged in industries not restricted or prohibited by the State
- Annual taxable income does not exceed 3 million RMB
- The number of employees does not exceed 300
- Total assets do not exceed 50 million RMB
Refund of incremental VAT credits
From the tax filing period of April 2022, refund of incremental VAT credits is extended to micro and small enterprises, and individual-owned businesses. Such enterprises are also granted a lump sum refund of existing tax credits.
Such enterprises shall meet the following conditions to apply for a refund.
Tax credit rating is A or B;
Has not obtained any VAT credit refund or export tax refund in a fraudulent manner or falsely issued any VAT invoice in the 36 months before the application for the tax refund;
Has not been subjected to penalties on two or more occasions by a tax authority for tax evasion in the 36 months before the application for tax refund; and
Has not benefited under the policy of “immediate refund upon payment” or “return/refund after payment” of excess VAT since April 1, 2019.
Small-scale VAT taxpayers
Small-scale VAT taxpayers subject to 3% VAT on sales revenue will be exempted from VAT from 1 April to 31 December 2022.
Small-scale VAT taxpayers are taxpayers engaged in producing goods or providing services with an annual VAT taxable revenue not exceeding 5 million RMB.