Announcement on EIT Preferential Policies for Small and Low-profit Enterprises and Individual Businesses

关于小微企业和个体工商户所得税优惠政策的公告 (中文)

Caishui [2023] No.6 — Jointly issued by the Ministry of Finance and the State Taxation Administration on March 26, 2023. Effective from January 1, 2023 to December 31, 2024.

Sources:

• Chinese text: 江苏省税务局 (Jiangsu Provincial Tax Service)

All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.

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To support the development of small and micro enterprises (小微企业) and individual businesses (个体工商户), the relevant tax policies are hereby announced as follows:

Article 1

For small and low-profit enterprises (小型微利企业), the portion of annual taxable income not exceeding RMB 1 million shall be included in the taxable income at a reduced rate of 25%, and enterprise income tax shall be levied at the rate of 20%.

Article 2

For individual businesses (个体工商户), the portion of annual taxable income not exceeding RMB 1 million shall be subject to a 50% reduction in individual income tax, on top of existing preferential policies.

Article 3 — Definition of Small and Low-profit Enterprise

A "small and low-profit enterprise" as referred to in this announcement means an enterprise that:

1. Is engaged in industries that are not restricted or prohibited by the state; and
2. Simultaneously meets all three of the following conditions:
   • Annual taxable income does not exceed RMB 3 million;
   • Number of employees does not exceed 300 persons;
   • Total assets do not exceed RMB 50 million.

Number of employees includes both employees with whom the enterprise has established a labor relationship and dispatched workers accepted by the enterprise. The number of employees and total assets shall be determined based on the quarterly average for the full year, calculated as follows:

Quarterly average = (Beginning of quarter + End of quarter) ÷ 2

Annual quarterly average = Sum of all quarterly averages ÷ 4

Where an enterprise commences or ceases business operations during the year, its actual period of operations shall constitute one tax year for the purpose of determining the above indicators.

Article 4 — Effective Period

This announcement shall be effective from January 1, 2023 to December 31, 2024.

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Ministry of Finance and State Taxation Administration

March 26, 2023