The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") jointly released on August 2, 2023 the Announcement of the Tax Policies to Further Support the Growth of Small Businesses and Self-employed Households, as well as the supporting documents regarding tax collection and administration. The relevant policies as mentioned in the documents would be implemented during the period from January 1, 2023 to December 31, 2027.
It is clarified in the Announcement that:
(1) the annual taxable income of self-employed households on which the individual income tax is halved, as provided in the MOF and STA No.6 (2023) Announcement, would be raised to no more than 2 million yuan from no more than 1 million yuan;
(2) the "six local taxes and two fees" levied on small-scale VAT taxpayers, small low-profit enterprises and self-employed households for no more than 50% of their taxable income according to the MOF and STA No.10 (2022) Announcement would be fixed at halved; and
(3) the policy of levying corporate income tax at a reduced percentage of 25% as per the tax rate of 20% (ultimate CIT rate at 5%) for small micro-profit businesses, as stipulated in the MOF and STA No.13 (2022) Announcement and the MOF and STA No.6 (2023) Announcement, would be extended to December 31, 2027.