The Chinese Ministry of Finance announced on Monday that it has introduced preferential tax policies for small firms and household businesses, as part of efforts to boost the economic recovery. The ministry’s notice stated that China will impose a 20% income tax on small firms with annual sales of no more than 1 million yuan ($145,340.39), effective from the beginning of 2023 to the end of 2024. To qualify for the lower tax rate, small firms must have annual taxable income not exceeding 3 million yuan, employ no more than 300 people, and have total assets not exceeding 50 million yuan.
Additionally, the ministry will reduce personal income tax by 50% for household businesses with annual sales not exceeding 1 million yuan. This year, the government has pledged to improve its tax preferential policies by offering more tax cuts and refunds to support the economy, which is recovering steadily from one of the worst performances in nearly half a century last year. As of March 22, $1 is equal to 6.8804 Chinese yuan renminbi.