New tax break measures for small and micro businesses announced
In January 2019, China announced more preferential policies for small and micro businesses. These new tax-cutting measures will enable to save them a total of 200 billion yuan annually.
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Small companies are a pillar to a sound economy
At a recent State Council meeting in Beijing, chaired by Premier Li Keqiang, the follow-up statement elaborates on these changes. The upcoming policies will include substantial drops in business income tax rates and a considerable increase in the tax threshold. Even more companies will qualify to benefit from these favorable policies. This is especially encouraged, as during the meeting, it was stressed how the development of small and micro companies is the key to a sound economy and stable employment.
Tax reductions to come
According to the new policies, small firms with taxable revenues of less than 1 million yuan will see the tax rate fall to 5 percent. Those with revenues above 1 million yuan but lower than 3 billion yuan will have a rate of 10 percent.
Additionally, more than 95 percent of businesses may enjoy the tax reduction, out of which 98 percent are private enterprises.
For micro firms and the self-employed, a new value-added tax threshold will be implemented. It will now be 100 000 yuan in terms of monthly sales, instead of the previous 30 000 yuan.
Furthermore, more areas will see reduced taxes including resources and land use of small companies, while favorable policies for investors in tech startups will be rolled out.
The new tax break policies will be effective from January 1, 2019.
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