Small Businesses in China See Taxes Slashed

January 7, 2015 Taxation in China

BEIJING – Tens of millions of business-owners in China will see their tax obligations fall by as much as 40 percent, as the government recognizes the financial burdens faced by owners of small businesses.

With the start of the new year, self-employed individuals working in China will only be levied business tax on 60 percent of their incomes, according to a statement issued by the State Administration of Taxation.

The new tax break is intended to benefit the significant number of individuals who run small- and micro-sized businesses in China, including the numerous stall holders and hawkers in the country.

In the past, small businesses with self-employed owners were taxed at the same rate as larger corporations, however, the government has now confirmed that self-employed individuals should face a different tax rate, as they face thoroughly different business circumstances to larger businesses, and the owners of these small businesses rely on their enterprises to cover basic living expenses.

It is estimated that there are tens of millions of self-employed businesses in China, which make up a large portion of the country’s private sector.

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