New Tax Breaks for Small Businesses in China

October 2, 2014 Taxation in China

Taxes in ChinaBEIJING – Millions of small business in China will enjoy a temporary reprieve from taxes, as the government aims to use tax cuts to encourage more employment and business activity.

From the start of October until December 31st 2015 small businesses in China earning less than RMB 30 000 per month will be exempt from value added tax and business tax, according to information in a new statement issued on September 29th by the State Administration of Taxation.

Previously the tax exemptions were granted to micro-sized businesses with profits of less than RMB 20 000 per month.

The reduced tax obligation are intended to further drive the development and growth of small- and micro-sized businesses, which Premier Li Keqiang has described as on of the main forces behind the economic development of the country, and one of the main avenues for innovation and job creation.

The tax reductions will be paired with several other measures aimed at boosting employment and the creation of new small businesses, including streamlining the process of starting a new company, and easing access to credit.

It is estimated that at the end of 2013 small- and micro-sized firms accounted for an overwhelming portion of the business in the country, with 76.6 percent of businesses being made up by small firms.

Photo By: Francisco Anzola