Preferential Income Tax Policies for Small Low-profit Enterprises was Further Expanded

We found recently the local tax bureau issued a series of regulation on giving the preferential income tax policies for small low-profit enterprises in China. We understand you may have lots of similar clients who can enjoy such policy. We conclude as below some of the main points for your understanding on such regulations.

 

Q1: What is “Small Low-profit Enterprises”?

A1: an enterprise that operates in an industry not restricted by the state and satisfies the following conditions:
1. Operating in the industrial industry, with an annual taxable income of no more than CNY300, 000, a payroll size of at most 100 persons, and a total amount of assets not exceeding CNY30 million;
2. Other industry, with an annual taxable income of no more than CNY300, 000, a payroll size of at most 80 persons, and a total amount of assets not exceeding CNY10 million;

 

Q2: What is the tax preferential policy?

A2: The Circular stipulates, from October 1, 2015 to December 31, 2017, for small low-profit enterprises whose annual taxable income is no more than CNY300,000, 50% of their income will be included into the taxable income, and the enterprise income tax shall be charged at the rate of 20%.

 

Q3: Is there any restriction on the way for tax payment?

A3: No. it is applicable for both method of checking the accounting books and method of verification.

 

Q4: Whether the company needs to get the pre-approval from the tax bureau?

A4: No. the company can record at the time of annual tax clearance and file the information as “total asset”, ”staff number”, “the industry”, “whether operates in an industry not restricted by the state”.

 

Q5”:  What kind of situation, it is applicable for the full-amount 50% deduction?

A5: Small Low-profit Enterprises which annual accumulative profit or taxable income is no more than RMB200, 000; or Small Low-profit Enterprises which is to be set up after 1 Oct 2015 with annual accumulative profit or taxable income is no more than RMB300, 000.

 

Q6: What to calculate during the transitional period?

A6: For Small Low-profit Enterprises which annual accumulative profit or taxable income is between RMB200, 000 and RMB300, 000, the taxable income before the 1 Oct 2015 shall be charged at the rate of 20%, whilst that after 1 Oct 2015 shall be charged at the rate of 10%.

Meanwhile, the income of small low-profit enterprises obtained during the period from October 1, 2015 to December 31, 2015 will be included into the taxable income based on the proportion of the number of months with business operation after October 1, 2015 in the annual number of months with business operation in 2015.

 

We can also provide the consulting service on accounting and taxation matters. If you want to know more details, please contact our senior consultant.

Ms. Jojo Hu

TEL: 0086-21-68868335 ext 324 / FAX: 0086-21-68868021

Email: jojohu@shanghaiinvest.com