China will cut RMB 200 billion(USD29.43billion) worth of taxes this year. The tax cuts, which were initially announced by China’s State Council on January 9, expand the scope of preferential policies to more firms and offer targeted support for high-tech investment. They apply to taxes paid from January 1, 2019 and will be in place for three years.
Expanded CIT Incentives
According to the Notice on Implementing the Policy of Inclusive Tax Relief for Small and Micro Enterprises, now companies with annual taxable income below RMB 1 million(USD147,290) per year can enjoy preferential corporate income tax (CIT) rate of 20 percent on 25 percent of their income, with the remaining 75 percent tax-free. While previously such companies could only benefit from a preferential 20 percent CIT rate on 50 percent of their income, with the other 50 percent would be tax-free.
Further more,companies with taxable income from RMB 1 to 3 million (USD147,290 to 441,870) can now enjoy the preferential 20 percent CIT rate on 50 percent of their income, with the other 50 percent tax-free.
VAT Exemptions Raised, Other Incentives Introduced
Small-scale VAT taxpayers with monthly sales under RMB 100,000 (US$14,715) are exempt from paying VAT on a number of items, up from RMB 30,000 (US$4,415) previously per the Notice on the Collection and Management of Small-scale Taxpayer Exemption from VAT Policy, released by the State Administration of Taxation on January 19. Small-scale taxpayers with monthly sales under RMB 100,000 and quarterly sales under RMB 300,000 (USD44,145) do not need to pay VAT on such sales.
Further general VAT taxpayers with less than RMB 5 million (US$734,500) in sales over the last 12 months or four quarters can opt to transfer to small-scale VAT taxpayer status by December 31, 2019.
More Tax Cut Expected in 2019
The cuts are just the latest in a series of measures to cut costs for business. These tax cut incentives will help create a better business environment for the entity economy, improve the competitiveness for qualified enterprises and benefit directly the high-end manufacturing and tech-innovation companies.
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If you have further inquires on tax reform, tax planning and other tax issues, please feel free to contact with Ms Vera by calling at 86-755-82213750/13352984677(Wechat) or email to fxy@citilinkia.com
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