China: EIT Preferential Policy for the Small Enterprises with Low Profit

China - 03 / 30 / 2022

China Tax Alert

From 1 January 2021 to 31 December 2022, small enterprises with low profit will be subject to EIT of 2.5% on the part of annual Enterprise Income Tax (EIT) taxable income that is no more than CNY 1 million.

According to the most recent Announcement (2022) No. 13 issued by the Ministry of Finance and the State Administration of Taxation, from 1 January 2022 to 31 December 2024, small enterprises with low profit will be subject to EIT of 5% for the part of annual EIT taxable income that exceeds CNY 1 million but is no more than CNY 3 million.

“Small enterprises with low profit” refers to an enterprise engaging in an industry that is not restricted or prohibited by the Chinese government, while satisfying all of the following three conditions concurrently:

a) annual EIT taxable income not exceeding CNY 3 million;

b) with less than 300 employees; and

c) with total assets less than CNY 50 million.