State Administration of Taxation (SAT) of China has published Circular 77/2018 to extend the tax incentive for small and low-profit enterprises. The incentive provides for a 50% reduction in taxable income with a reduced tax rate of 20%.
From January 1, 2018 to December 31, 2020, the annual taxable income of small and low-profit enterprises will be raised from CNY 500,000 to CNY 1 million.
Excluding meeting the taxable income threshold, an enterprise must also meet certain employee and total asset conditions. For industrial enterprises, the number of employees must not exceed 100 and total assets must not exceed CNY 30 million. For other enterprises, the number of employees must not exceed 80 and total assets must not exceed CNY 10 million.
