BEIJING: Preferential tax policies have helped Chinese small and micro firms save around 48.63 billion yuan ($7.95 billion) in the first half of 2015.
In the first six months, about 2.39 million small and micro enterprises in China enjoyed preferential policies on corporate income tax, resulting in savings of about 8.65 billion yuan, the State Administration of Taxation (SAT) said here the other day.
More than 27 million small and micro firms, including privately-owned businesses, enjoyed value added tax (VAT) and business tax cuts, which saved them about 39.98 billion yuan by the end of June.
Meanwhile, about 5.09 million enterprises have saved around 110.2 billion yuan due to the replacement of business tax with value added tax, the SAT said.
Business tax is taken from the gross revenue of a business, while a VAT is levied on the difference between a commodity’s price before taxes and its cost of production.
China has expanded preferential tax policies for small companies and reduced their tax burden to boost economic growth and employment, as nearly 80 percent of urban jobs are provided by small companies.
The State Council announced earlier in February that, from this year through the end of 2017, companies with annual taxable income under 200,000 yuan ($32,573) will have their corporate tax halved. Previously, the threshold was 100,000 yuan.
Value added tax and business tax were temporarily suspended for firms with monthly revenues under 30,000 yuan, effective from October 2014 to the end of 2015. Previously, the threshold for the policy was 20,000 yuan.
Since the pilot tax reduction scheme to replace business tax with value added tax (VAT) was rolled out in 2012, a total of 484.8 billion yuan has been reduced in tax bills, the SAT said.
