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Unlocking China Tax Relief: Key Incentives for Small-Scale EnterprisesThe latest Government Work Report outlines several important tax incentives aimed at supporting small-scale businesses in China. These policies span three main areas: Value-Added Tax (VAT), Corporate Income Tax (CIT), and Employment Security Contributions for Persons with Disabilities. Here's a concise overview of how small and micro enterprises can benefit. 01, Value-Added Tax (VAT) According to the latest policy, under the category of value-added tax, "small-micro enterprises" refers to small-scale taxpayers whose monthly sales do not exceed RMB 150,000 or quarterly sales do not exceed RMB 450,000. If this condition is met, VAT is waived, up to 1.8 Million incoming is tax free. If not met, VAT is 1%, reduced from 3% (compared to General taxpayer 6%). The tax-cut policy is extended to the end of 2027. 02, Corporate income tax "Small-micro enterprises" under the category of enterprise income tax, the full name should be "small-micro profit enterprises", must meet the following four conditions at the same time: 1) engaged in non-restricted and prohibited industries in China; 2) The number of employees does not exceed 300; 3) The total assets do not exceed RMB 50 million; 4) Annual taxable income, which should be distinguished between the two paragraphs (1) The annual taxable income is less than RMB 1 million On the basis of the existing preferential policy (i.e., a reduction of 25 % into taxable income and a 20% corporate income tax rate), it is levied in half. In other words, the adjusted policy should be a reduction of 12.5 % into the taxable income, at a rate of 20% to pay corporate income tax. (2) For the portion of annual taxable income exceeding RMB 1 million but not exceeding RMB 3 million, the amount of taxable income shall be reduced by 50% and the enterprise income tax shall be paid at a rate of 20%. 03, Employment security for the disabled According to Article 4 of the Ministry of Finance's Announcement on Adjusting the Policy on the Collection of Employment Security Benefits for Persons with Disabilities, enterprises with 30 or fewer employees shall be temporarily exempted from the collection of employment security benefits for persons with disabilities. In other words, enterprises (whether ordinary taxpayers or small-scale taxpayers) only need to meet the "number of employees is 30 or fewer " condition (regardless of sales, industry, total assets, profits), can enjoy the "temporary exemption from the collection of employment security benefits for persons with disabilities" this preferential treatment. In addition, for the above-mentioned period, the policy of reducing the employment security benefits for persons with disabilities in proportion to the distribution is also implemented: 1) The proportion of employment of workers with disabilities reaches more than 1% (inclusive), but does not reach the proportion prescribed by the people's governments of the provinces, autonomous regions and municipalities directly under the Central Government (generally 1.5%), and is levied in half; 2) If the proportion of workers with disabilities does not reach 1%, it shall be levied at a rate of 90% of the amount payable in accordance with the provisions. These tax and fee relief measures are designed to ease the financial burden on small businesses, promote inclusive employment, and encourage sustainable economic growth in China. Small and micro enterprises are strongly encouraged to assess their eligibility and take full advantage of these benefits. How Gomax Can Help At Gomax International, we specialize in helping international and domestic businesses navigate the complex Chinese tax and regulatory landscape. Whether you're a small startup or an expanding enterprise, our team provides end-to-end support including:
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