From January 1, 2018 to December 31, 2020, the “Notice on Issues Concerning the Implementation of Inclusive Tax Reduction and Exemption Policy for Small and Micro Enterprises” in China is as follows:
Notice on Implementing the Inclusive Tax Relief Policy for Small and Micro Enterprises
Finance and Taxation (2019) No. 13
The finance departments (bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate state planning, the Finance Bureau of Xinjiang Production and Construction Corps, and the State Administration of Taxation.
In order to implement the decisions and deployments of the Party Central Committee and the State Council, and further support the development of small and micro enterprises, we hereby notify the following matters concerning the implementation of inclusive tax reduction and exemption policies for small and micro enterprises:
- Small-scale VAT taxpayers with monthly sales of less than 100,000 yuan (including this figure) are exempt from VAT.
- For small and low-profit enterprises whose annual taxable income does not exceed 1 million yuan, a 25% reduction is included in the taxable income, and the corporate income tax is paid at a tax rate of 20%; For the portion of annual taxable income exceeding 1 million yuan but not exceeding 3 million yuan, 50% shall be included in the taxable income, and the corporate income tax shall be paid at the tax rate of 20%.
The above-mentioned small and low-profit enterprises refer to enterprises that are engaged in non-restricted and prohibited industries by the state and meet the three conditions of annual taxable income not exceeding 3 million yuan, not more than 300 employees, and not more than 50 million yuan in total assets.
The number of employees includes the number of employees who have established labor relations with the enterprise and the number of labor dispatch workers accepted by the enterprise. The so-called number of employees and total assets indicators shall be determined according to the company’s quarterly average throughout the year. The specific calculation formula is as follows:
Quarterly average = (Beginning quarter value + End quarter value) ÷ 2
Annual quarterly average = Sum of annual quarterly averages ÷ 4
For those who start or terminate business activities in the middle of the year, the actual business period shall be used as a tax year to determine the above-mentioned relevant indicators.
- The people’s governments of provinces, autonomous regions, and municipalities directly under the Central Government shall determine based on the actual conditions of the region and the needs of macro-control. Small-scale VAT taxpayers can reduce resource tax, urban maintenance and construction tax, real estate tax, and tax within 50% of the tax amount. Urban land use tax, stamp tax (excluding securities transaction stamp tax), cultivated land occupation tax, education surcharge, and local education surcharge.
- Small-scale value-added taxpayers who have already enjoyed resource tax, urban maintenance and construction tax, real estate tax, urban land use tax, stamp tax, farmland occupation tax, education surcharge, local education surcharge and other preferential policies in accordance with the law can enjoy the third part of this notice. The preferential policies stipulated in the Article.
- “Notice of the Ministry of Finance and the State Administration of Taxation on Tax Policies for Venture Capital Enterprises and Individual Angel Investors” (Caishui  No. 55) Article 2 (1) Regarding the conditions for start-up technology-based enterprises, “the number of employees shall not exceed 200 ” is adjusted to the number of employees does not exceed 300″, “total assets and annual sales income do not exceed 30 million Yuan” is adjusted to “total assets and annual sales income do not exceed 50 million Yuan”.
For the investment that occurred from January 1, 2019 to December 31, 2021, if the investment has been over 2 years and meets the requirements of this notice and other conditions specified in Caishui  No. 55, Caishui  No.55 can be applied the prescribed tax policy.
The investment that occurred within the 2 years before January 1, 2019, and the investment for 2 years from January 1, 2019 and meets the provisions of this notice and other conditions specified in Caishui  No. 55, may be applicable to taxation  Taxation policy stipulated in File 55.
- The implementation period of this notice is from January 1, 2019 to December 31, 2021. “Notice of the Ministry of Finance and the State Administration of Taxation on the Continuation of Value-Added Tax Policies for Small and Micro Enterprises” (Caishui  No. 76), and “Notice of the Ministry of Finance and the State Administration of Taxation on Further Expanding the Scope of Preferential Income Tax Policies for Small and Low-Profit Enterprises” (Caishui  No. 77) ) At the same time repeal.
- Finance and taxation departments at all levels should earnestly improve their political positions, thoroughly implement the decisions and arrangements of the Party Central Committee and the State Council for tax reduction and fee reduction, fully understand the importance of inclusive tax reduction and exemption for small and micro enterprises, and earnestly assume the main responsibility for implementation. As a major task, it is necessary to strengthen organization and leadership, carefully plan and deploy, and implement it without compromise. It is necessary to intensify efforts, innovate methods, strengthen publicity and guidance, optimize taxation services, improve taxation convenience, and ensure that taxpayers and payers can actually enjoy the policy dividends of tax reduction and fee reduction. It is necessary to closely track the implementation of the policy, strengthen investigation and research, and promptly give feedback to the Ministry of Finance and the State Administration of Taxation on outstanding issues, opinions and suggestions reflected by all parties in the implementation of the policy.
January 17, 2019