On August 19, State Council of China decided to improve the tax breaks available for small and low-profit enterprises. Small and low-profit enterprises can pay their income taxes at the rate of 20% with following conditions:
- any industrial enterprise with an annual taxable amount not exceeding RMB 300,000, less than 100 employees and a total asset of no more than RMB 30 million;
- any other enterprise with an annual taxable amount of no more than RMB 300,000, no more than 80 employees and total asset not exceeding RMB 10 million.
Small scale taxpayers are eligible for lower value added tax (VAT) and required annual sales volume of industrial enterprises is reduced from RMB one million to RMB 500,000 and commercial enterprises, RMB1.8 million to RMB 800,000. In addition, the VAT bearing rate for small scale taxpayers, both industrial and commercial, is lowered from 6% and 4% to 3%.
Verified taxable income rate is further decreased. According to the Measures for Verification Collection of Enterprise Income Tax, taxable income rate applicable to the following industries is further reduced: manufacturing industry, from 7-20% to 5-15%; entertainment industry, from 20-40% to 15-30%; transportation industry, from 7-20% to 7-15%; and food and beverage, from 10-25% to 8-25%. It is also stipulated that a 3-10% rate is applicable to agriculture, forestry, animal husbandry and fishery.
