Bigger tax cuts rolled out for small businesses

The State Council executive meeting on Wednesday rolled out bigger tax cuts and tax exemptions for small and micro-sized enterprises.

A statement released after the meeting said the eligibility of small and low-profit businesses for preferential corporate tax will be significantly expanded, and deeper cuts to corporate tax will be introduced.

Small and low-profit businesses with annual taxable incomes of less than 1 million yuan ($146,250) will be eligible to have their tax based on 25 percent of their taxable income, which is expected to reduce the tax burdens on such enterprises to 5 percent. Businesses with annual taxable incomes of between 1 million and 3 million yuan will be eligible to have their tax calculated on 50 percent of their taxable income, reducing their tax burden to 10 percent. The adjusted tax incentives are expected to cover 95 percent of corporate taxpayers, 98 percent of them private businesses.

Meanwhile, the value-added tax threshold for small-scale taxpayers, which mainly includes small and micro-sized enterprises and individual businesses and individuals, will be raised from 30,000 yuan to 100,000 yuan in monthly sales, the statement said.

Provincial-level governments will also be given the authority to cut taxes by up to 50 percent for smallscale VAT taxpayers under several local tax items, including resources tax, as well as education and local education surcharges.

The scope of tax incentives applied to investment in high-tech startups will be expanded to give more tax breaks to venture capital firms and angel investors investing in these businesses, the statement said.

The tax incentives will cover all taxes incurred since Jan 1, and will be effective for the next three years. They are expected to save small and micro-sized businesses about 200 billion yuan a year, the statement said.