Corporate Income Tax Incentives for Small and Low-Profit Enterprises
All types of small and low-profit enterprises in China can benefit from a reduced corporate income tax rate of 20% with reduced tax base:
| Annual Taxable Income | Tax Base | Tax Rate | Effective Rate | Effective Period |
|---|---|---|---|---|
| Portion less than 3 million yuan | Income × 25% | 20% | 5% | 2023.1.1 – 2027.12.31 |
Eligibility Criteria for Small and Low-Profit Enterprises:
- Annual taxable income does not exceed 3 million yuan (about $458,500 USD)
- Number of employees does not exceed 300
- Total asset value does not exceed 50 million yuan (about $7.7 million USD)
VAT Incentives for Small-Scale Taxpayers
| Monthly Sales Amount | Quarterly Sales Amount | VAT Incentives | Additional Reductions |
|---|---|---|---|
| Less than 100,000 yuan | Less than 300,000 yuan | VAT exemption (2023.1.1 – 2027.12.31) | Education fee exemption |
High and New Technology Enterprises (HNTEs)
The reduced tax rate for qualifying enterprises is 15%. Loss carryforward is also allowed for up to 10 years instead of 5 years for ordinary enterprises.
Qualification Criteria:
- Registered in China for at least one year
- Own intellectual property rights to core technology
- Operate in state-supported advanced technology fields
- Technical personnel ratio more than 10% of total employees
- R&D expenses constitute specified percentage of total revenue
Technology-Based Small and Medium Enterprises (TSMEs)
Enjoy the same 10-year loss carryforward benefits, plus super deductions for R&D expenses:
- 100% additional deduction for expenses that do not constitute intangible assets
- 200% amortization for expenses that constitute intangible assets