State Council unveils tax break for small firms
Companies paying under 200,000 yuan in profits tax to see rates halved, while unemployment insurance obligations also eased, State Council says
Beijing unveiled tax reductions for small companies yesterday in a bid to ease their financial burden amid a weakening economy and free up funds for them to invest in technology.
The policy could herald a round of stimulus measures from the central government amid concerns the mainland is headed for a period of deflation after consumer inflation hit a five-year low last month.
The State Council said in a statement after a meeting chaired by Premier Li Keqiang that a proactive approach must be taken to offset the impact of the growth slowdown.
According to Xinhua, small firms that pay 200,000 yuan (HK$251,800) or less in profits tax will need to pay only half the amount. The policy comes into effect this year and continues until 2017.
The measure expands upon an existing scheme that applied to firms paying 100,000 yuan or less in corporate income tax, introduced in 2014 and runs until next year. The State Administration of Taxation said earlier this year about 2.5 million small firms benefited from that incentive last year, leading to a combined saving of 10 billion yuan in payments.
The State Council also said the unemployment insurance rate would be lowered, from the current 3 per cent to 2 per cent. Currently, employees contribute 0.5 per cent of their monthly salary towards the insurance, with the employer responsible for 2.5 per cent.
The statement did not detail how the lower rate breaks down.