Cai Shui [2019] No. 13
The finance departments (bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate state planning; the Finance Bureau of Xinjiang Production and Construction Corps; and offices of the State Administration of Taxation in all provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate state planning:
For the purposes of implementing the decisions and arrangements of the CPC Central Committee and the State Council, and further supporting the development of micro and small enterprises, you are hereby notified of the matters concerning the implementation of inclusive tax deduction and exemption policies for micro and small enterprises as follows:
I. Small-scale value-added tax (“VAT”) taxpayers with a monthly sales amount of RMB100,000 or less shall be exempt from VAT.
II. The annual taxable income of a small low-profit enterprise that is not more than RMB1 million shall be included in its taxable income at the reduced rate of 25%, with the applicable enterprise income tax rate of 20%; and the annual taxable income that is not less than RMB1 million nor more than RMB3 million shall be included in its taxable income at the reduced rate of 50%, with the applicable enterprise income tax rate of 20%.
For the purpose of this Announcement, a “small low-profit enterprise” means an enterprise that engages in any industry not restricted or prohibited by the state and concurrently meets three conditions, that is, its annual taxable amount is not more than RMB3 million, the number of its employees is not more than 300, and its total assets do not exceed RMB50 million.
Employees mentioned herein include the employees that have established labor relations with enterprises and the dispatched workers accepted by enterprises. Employees and total assets mentioned shall be determined based on the quarterly average of enterprises in a year. The calculation formulas are as follows:
Quarterly average = (number at the beginning of the quarter + number at the end of the quarter) ÷2
Quarterly average in a year = (sum of the quarterly averages in a year) ÷4
In the case of opening or terminating business activities in the middle of the year, the above relevant indicators shall be determined with the actual operating period as a taxable year.
3. The people's governments of provinces, autonomous regions and municipalities directly under the Central Government shall determine, in accordance with the actual situation of the region and the needs of macro-control, that small-scale taxpayers of VAT may reduce the resource tax, the urban maintenance and construction tax, the property tax, the urban land use tax, the stamp tax (excluding the stamp tax on securities trading), the occupation tax on cultivated land and the additional education fee, and the local education additional tax within the range of 50%.
4. Small-scale VAT taxpayers that have enjoyed resources tax, urban maintenance and construction tax, real estate tax, urban land use tax, stamp tax, cultivated land occupation tax, additional education fee and other preferential policies in accordance with the law are eligible for enjoying overlapping preferential policies stipulated in Article 3 of this Notice.
5. In Article 2(1) Notice of the Ministry of Finance and the State Administration of Taxation on the Relevant Pilot Tax Policies for Venture Capital Enterprises and Individual Angel Investors (Cai Shui [2018] No. 55) regarding the conditions for scientific and technological enterprise at the start-up stage, “employees not more than 200” changes to “employees not more than 300” and “neither its total assets nor its annual sales revenues exceed RMB30 million” changes to “neither its total assets nor its annual sales revenues exceed RMB50 million”.
The tax policy stipulated in Cai Shui [2018] No 55 may be applied to investments that occurred between January 1, 2019 and December 31, 2021 and which have been invested for two years and meet other conditions stipulated in this Notice and Cai Shui [2018] No. 55.
The tax policy stipulated in Cai Shui [2018] No 55 may be applied to investments that occurred within two years before January 1, 2019 and which have been invested for two years and meet other conditions stipulated in this Notice and Cai Shui [2018] No. 55.
6. This Notice shall be effective from January 1, 2019 to December 31, 2021. Notice of the Ministry of Finance and the State Administration of Taxation on Continuing the Value-added Tax Polices for Micro and Small Enterprises (Cai Shui [2017] No. 76) and Notice of the Ministry of Finance and the State Administration of Taxation on Further Expanding the Scope of Preferential Income Tax Policies for Small Low-Profit Enterprises (Cai Shui [2018] No. 77) shall be repealed simultaneously.
7. Fiscal and taxation departments at all levels should earnestly raise political awareness, thoroughly implement the decision-making arrangements of tax reduction and fee reduction made by the Party Central Committee and the State Council, fully recognize the importance of inclusive tax reduction and exemption for small and micro enterprises, conscientiously assume the main body responsibility for implementation, and take it as a major task, strengthen organizational leadership, carefully plan and deploy, and put into practice effectively. We should intensify efforts, innovate ways, strengthen publicity and guidance, optimize taxation services, improve tax convenience, and ensure that taxpayers and payers actually enjoy the policy bonus of tax and fee reduction and exemption. We should closely follow up the implementation of the policy, strengthen investigation and give timely feedback to the Ministry of Finance and SAT, in response to the problems and suggestions reflected in the implementation of the policy.
Ministry of Finance, State Administration of Taxation
January 17, 2019