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China Halves Corporate Tax For Smallest Businesses

Thursday, April 15, 2021

Chinese authorities have announced enhanced temporary tax breaks for small businesses.

In announcement no. 12 of 2021, released on April 9, 2021, the Chinese Ministry of Finance and the State Administration of Taxation announced that small businesses will be subject to 20 percent corporate tax on just an eighth of their taxable income. Under the policy, these businesses, whose income must not exceed CNY1m, will be liable to an effective rate of just 2.5 percent.

The rate of personal income tax on sole traders has also been halved, also on the first CNY1m of taxable income.

The policy will apply from January 1, 2021, until the end of 2022.