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Circular on Extending the Scope of Preferential Enterprise Income Tax Policies for Small Scale Low-profit Enterprises

Document No.:Cai Shui [2017] No.43

Taxes:Comprehensive Taxation,Administration of Tax Levy & Collection,Enterprise Income Tax

Date of Promulgation:

IssueDepartment:Ministry of Finance,State Administration of Taxation

Date of Implementatio:2017-06-06


Financial Departments (Bureaus), State Taxation Bureaus and Local Taxation Bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state budgetary plan and Financial Bureau of Xinjiang Production and Construction Corps,

To further support the development of small scale low-profit enterprises, the enterprise income tax policies concerning small scale low-profit enterprises are hereby notified as follows:

Article I From January 1st, 2017 to December 31st, 2019, the upper limit of the annual taxable income of small scale low-profit enterprises shall be increased to 500,000 Yuan from 300,000 and for the small scale low-profit enterprises with their annual taxable income being lower than 500,000 Yuan (inclusive of 500,000 yuan), a reduced 50% of their income shall be included in the taxable income and the enterprise income tax shall be paid according to the tax rate of 20%.

The small scale low-profit enterprises in the preceding paragraph refer to those undertaking the industries not restricted or forbidden by the state and conforming to the following conditions:

(I)For industrial enterprises, their annual taxable income shall not exceed 500,000 Yuan, the number of employees 100 and their total asset 30,000,000 Yuan.

(II) For other enterprises, their annual taxable income shall not exceed 500,000 Yuan, the number of employees 80 and their total asset 10,000,000 Yuan.

Article II The number of employees mentioned in Article I includes the number of the employees who establish the labor relationship with the enterprises and the number of labor dispatching employees accepted by the enterprises.

The number of employees and the total asset mentioned shall be determined according to the quarterly average value in the enterprises’ whole year. Specific calculation formulas are as follows:

Quarterly average value = (value at beginning of the quarter + value at end of the quarter) ÷2

Quarterly average value in the whole year = sum of each quarterly average value in the whole year ÷4

Where enterprises start or end their businesses in the middle of a year, the actual operation period shall serve as a taxable year when determining the above-mentioned indexes.

Article III The Circular of the Ministry of Finance and the State Administration of Taxation Concerning the Preferential Enterprise Income Tax Polices for Small Scale Low-profit Enterprises (Cai Shui [2015] No. 34) and the Circular of the Ministry of Finance and the State Administration of Taxation on Extending the Scope of the Preferential Enterprise Income Tax Policies Enjoyed by Small Scale Low-profit Enterprises (Cai Shui [2015] No. 99) shall be nullified from January 1st, 2017.

Article IV The financial departments and taxation departments at each level shall strictly follow the regulations of the circular, play an active role in disseminating the preferential enterprise income tax policies and providing guidance to secure the full implementation of the preferential policies.


The Ministry of Finance and the State Administration of Taxation

June 6th, 2017

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