Announcement No. 2 of the State Taxation Administration, 2019
It is hereby announced the relevant issues of implementing the preferential taxation reducing policy for small low-profit enterprises according to the Law of the People’s Republic of China on Enterprise Income Tax and its implementation regulations and the Circular of the Ministry of Finance and State Taxation Administration on Implementation of Preferential Taxation Reducing Policy for Small Low-profit Enterprises (CS No. 13-2019, hereinafter referred to as the Circular):
1. From January 1, 2019 to December 31, 2021, for small low-profit enterprises with an annual taxable income of less than CNY 1 million, their income shall be included in the taxable income after deducting 25% of the income, they shall pay the enterprise income tax at the tax rate of 20%. For small low-profit enterprises with an annual taxable income of more than CNY 1 million but less than CNY 3 million, their income shall be included in the taxable income after deducting 50% of the income, they shall pay the enterprise income tax at the tax rate of 20%.
Small low-profit enterprises paying enterprise income tax whether by account checking-based way or authorization-based way may enjoy the above preferential policies.
2. The small low-profit enterprises mentioned herein refer to the enterprises engaged in industries not restricted or prohibited by the state, with an annual taxable income of less than CNY 3 million, the number of employees of less than 300, and a total asset of less than CNY 50 million.
3. small low-profit enterprises shall prepay the income tax quarterly.
During the pre-payment of enterprise income tax, the indexes of total assets, number of employees and annual taxable income of small low-profit enterprises shall be determined temporarily according to the circumstances of the end of the period as declared. Among those indexes, the quarterly average indexes of total assets and number of employees up to the end of the period as declared shall be calculated according to the formula of the "annual quarterly average" in Article 2 of the Circular; the annual taxable income index is temporarily determined according to the standard of not exceeding CNY 3 million at the end of the period as declared.
4. Enterprises not meeting the conditions of small low-profit enterprises previously may enjoy the taxation reducing policy for small low-profit enterprises according to the accumulated situation up to the end of the period as declared if the enterprises are judged to be in conformity with the conditions of small low-profit enterprises when prepaying the enterprise income tax in the middle of the year. The amount of enterprise income tax paid redundantly in previous period of the current year due to nonconformity to the conditions of small low-profit enterprises may be deducted from the amount of income tax payable in the following quarters.
If the enterprises prepaying the income tax monthly are judged to meet the conditions of small low-profit enterprises when declaring the prepayment in April, July and October of the current year according to Article 3 hereof, the next prepayment declaration period will be adjusted to quarterly prepayment. Once adjusted, no change will be made in the current year.
5. Small low-profit enterprises may enjoy the taxation reducing policy by filling in the relevant contents of tax return when prepaying and finally settling the income tax.
6. Where an enterprise subject to the authorization-based collection of income tax payable needs to adjust or reduce the quota as per the provisions of taxation reducing policy for small low-profit enterprises, the competent tax authority shall make adjustment in accordance with the procedure and inform the enterprise of the adjustment in a timely manner.
7. Where a small low-profit enterprise has enjoyed the taxation reduction policy when prepaying the income tax and the final settlement of the income tax does not conform to Article 2 of the Circular, it shall make up the income tax as regulated.
8. The Announcement of the State Taxation Administration on Tax Collection and Management Issues Concerning the Implementation of Further Expanding the Scope of Preferential Policies of Income Tax for Small Low-profit Enterprises(Announcement No. 40 of the State Taxation Administration, 2018) shall be abolished after the final settlement of income tax in 2018.
State Taxation Administration
January 18, 2019