Cai Shui [2018] No. 77

　　The Financial Department (Bureau of Finance) of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning, the Municipal Tax Service, SAT of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning, as well as the Bureau of Finance of Xinjiang Production and Construction Corps:

　　In order to further support the development of small meagre-profit enterprises, we hereby notify the policies relevant to income tax of small low-profit enterprises as follows:

　　I. From January 1 to December 31, 2020, upper limit of the annual taxable income for small low-profit enterprises is increased from RMB 500,000 to RMB1 million. For small low-profit enterprises with the annual taxable income below RMB1 million (including RMB1 million), 50% of their income will be calculated as the taxable income, with the 20% tax rate.

　　The small low-profit enterprises in the preceding paragraph refer to those engaged in the state unrestricted and non-prohibited industries and in line with the following conditions:

　　(I) Industrial enterprises, with the annual taxable income of no more than RMB1 million, the number of employees of no more than 100 and the total assets of no more than RMB30 million;

　　(II) Other enterprises, with the annual taxable income of no more than RMB1 million, the number of employees of no more than 80 and the total assets of no more than RMB10 million;

　　II. Employees mentioned in Article I of this Notice include the employees that have established labor relations with enterprises and the dispatched workers accepted by enterprises.

　　Employees and total assets mentioned shall be determined based on the quarterly average of enterprises in a year. The calculation formulas are as follows:

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

　　Quarterly average in a year = (sum of the quarterly averages in a year) ÷4

　　In the case of opening or terminating business activities in the middle of the year, the above relevant indicators shall be determined with the actual operating period as a taxable year.

　　III. The Notice on Expanding the Scope of Preferential Income Tax Policy for Small Low-profit Enterprises of the Ministry of Finance and State Administration of Taxation (Cai Shui [2018] No. 43) will be repealed as of January 1, 2018.

　　IV. The financial and taxation departments at all levels shall make positive efforts in the publicity and supporting work on the preferential income tax policy for small low-profit enterprises in strict accordance with provision of this Notice, to ensure the preferential policy is put in place.

Ministry of Finance, State Administration of Taxation

　　July 11, 2018