China extends tax breaks
Benefits small businesses, boosts jobs
Amid the slow-down of China’s economy, the Chinese government has announced a modest package of economy stimulus in the form of tax breaks extension for small and micro businesses and unemployed. Small to Medium size firms (SMEs), being the largest generator of labour and a significant contributor to the country’s GDP, are a key component of China’s economy. In view of this, the State Administration of Taxation and Ministry of Finance have announced the extension of tax-breaks program which will offer tax reduction to small businesses, including start- ups and boost employment through 2016.
WHO QUALIFIES TO ENJOY THE TAX BREAKS
- Start-up businesses established by new graduates;
- Companies established by previously registered unemployed worker who has been out of work for over six months and relies on government aide to make their living; and
- Companies hiring individuals who were previously unemployed for over a year.
HOW THE TAX BREAKS BENEFIT BUSINESSES
- Business set up by registered unemployed workers or recent graduates will be eligible for a maximum corporate income tax (CIT) deduction up to 9,600 RMB a year which is an increase from the maximum CIT deduction up to RMB 8,000 as per previous pro-employment measures.
- If start-up companies hire an individual who has been unemployed for over a year will be able to enjoy a CIT reduction of up to RMB 5,200 for each job opportunity provided to such candidates.
Previously similar pro-employment measures were taken which got expired at the end of 2013. This new policy is viewed as an extension of pro-employment measures and is prolonged till December 31, 2016. The new policy has wider scope with no restrictions on industries/ business activities. Further, it is expected to be more effective with simplified administrative procedures.