China’s lowest company income tax

The Ministry of Finance and the State Administration of Taxation issued the Announcement (SAT) on Further Implementing Preferential Income Tax Policies for Small and Micro Enterprises (Announcement No. 13 [2022] issued on 14 March and published on 18 March 2022 by SAT) to further reduce the tax burden on smaller enterprises and support their development.

Announcement No. 13 revised the income tax policy for small and low-profit enterprises with an annual taxable income exceeding 1 million CNY but not more than 3 million CNY: for those enterprises, only 25% of the taxable income exceeding 1 million CNY and up to 3 million CNY will be taxable and subject to a CIT rate of 20%, resulting in an actual tax rate of 5% (compared to the previous 10%).

The part of taxable income up to 1 million CNY will be still taxed and subject to an actual tax rate of 2.5%.

The Announcement also extended the policy to 2024: the new tax rates will be applicable from 1 January 2022 to 31 December 2024.

Small and low-profit enterprises have a taxable income, total assets, and total headcount not exceeding CNY 3 million, CNY 50 million, and 300 persons.