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Upper Annual Tax Limit Raised for Low-Profit Businesses

The upper limit of annual taxable income of low-profit enterprises is to be raised from RMB300,000 to RMB500,000. In the case of enterprises with an annual taxable income of RMB500,000 or below, taxable income will be calculated at the reduced rate of 50%, with corporate income tax payable at a rate of 20%. The changes apply to the period 1 January 2017 to 31 December 2019.

Under the terms of these revised regulations, small low-profit enterprises are defined as commercial entities that engage in businesses not restricted or prohibited by the state and that meet the following criteria:

  • Industrial enterprises: Have an annual taxable income not exceeding RMB500,000, have no more than 100 employees and have total assets valued at no more than RMB30 million
  • Non-industrial enterprises: Have an annual taxable income not exceeding RMB500,000, have no more than 80 employees, and have total assets valued at no more than RMB10 million

The new regulations were outlined in the Circular on Expanding the Scope of Preferential Income Tax Policies for Small Low-Profit Enterprises, as jointly issued by the Ministry of Finance and the State Administration of Taxation.

For further details (in Chinese), please refer to the following website:

Circular on Expanding the Scope of Preferential Income Tax Policies for Small Low-Profit Enterprises

Content provided by Picture: HKTDC Research
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