Announcement of the Ministry of Finance and the State Taxation Administration on the Preferential Tax Policies for Small and Micro Enterprises and Individual Businesses in 2023.

To support the development of small and micro enterprises and individual businesses, the following tax policies are hereby announced:

1. For small-scale enterprises with an annual taxable income not exceeding 1 million yuan, 25% of the income exceeding this threshold will be deducted from the taxable income, and the remaining amount will be subject to a 20% corporate income tax rate.

2. For individual businesses with an annual taxable income not exceeding 1 million yuan, in addition to the existing preferential policies, the personal income tax will be levied at a reduced rate of 50%.

3. The term “small and micro enterprises” in this announcement refers to enterprises engaged in non-restricted and non-prohibited industries that meet the following three conditions: an annual taxable income not exceeding 3 million yuan, a workforce not exceeding 300 employees, and total assets not exceeding 50 million yuan.
   The workforce includes both employees under labor contracts and dispatched employees engaged by the enterprise. The indicators of workforce and total assets should be based on the quarterly average value throughout the year. The specific calculation formula is as follows:
   Quarterly average value = (Beginning value + Ending value) / 2
   Annual quarterly average value = Sum of quarterly average values for the year/ 4
   For enterprises that commence or cease business operations during the year, the actual operating period will be considered as one tax year for determining the aforementioned indicators.
4. This announcement is effective from January 1, 2023, to December 31, 2024.

This announcement is issued by the Ministry of Finance and the State Taxation Administration.

(Source: Ministry of Finance, State Taxation Administration)