China implements temporary tax preferential policies

China further reduced tax rates on corporate income tax, individual income tax and value-added tax in 2021 to help taxpayers during COVD-19. These temporary tax preferential policies will expire on 31 December 2022 and are detailed below:

 

Corporate Income Tax:

The annual taxable income not more than RMB 1 million for a small thin-profit enterprise shall be subject to one-half reduced corporate income tax based on the 2019 preferential policies. Thus, the corporate tax rate shall be 2.5% in 2021 and 2022 for taxable income not more than RMB 1 million, 10% for taxable income RMB 1 million to RMB 3 million, and 25% for the annual taxable income more than RMB 3 million.

Individual Income Tax:

The annual taxable income of individual industrial and commercial households that is not more than RMB 1 million shall be subject to one-half reduced individual income tax.

Value-added Tax:

Since 1 April 2021 to 31 December 2022, where the total monthly sales amount of a small-scale VAT taxpayer does not exceed RMB 150,000 (or its quarterly sales amount does not exceed RMB 450, 000 if one quarter is taken as a taxable period), the taxpayer shall be exempt from VAT.

However, if the small-scale VAT taxpayer issued VAT special fapiao, the tax amount of VAT special fapiao can’t be exempted.

Until 31 December 2021, the taxable sales income shall be subject to VAT, if applicable, at the reduced rate of 1% instead of 3%.

For more information contact Ken Lee, Lee & Lee Associates, Beijing.

About Lee & Lee Associates:

Lee & Lee Associates is a professional accounting and business consulting firm dedicated to providing high quality services in accounting, audit, tax, financial due diligence, investment consulting, and business establishment in China. Their clients represent foreign companies, joint ventures, wholly foreign owned enterprises, representative offices, and foreign individuals. Their professionals come from international accounting firms, multinational enterprises, fast-growing small and medium-sized companies and tax authorities.

All of their partners are Chinese Certified Public Accountants with over 10 years of working experience. Apart from being CCPAs, some of them are also members of the Association of Chartered Certified Accountants (ACCA, UK), Chinese Certified Tax Accountants, Certified Internal Auditors and attorneys at law.