Q: What is the implementation period of the VAT reduction and exemption policy for small-scale taxpayers?
Small-scale VAT taxpayers with monthly sales of less than 100,000 yuan (US$13,669.1, inclusive) are exempt from value-added tax (VAT).
For such taxpayers, a 3% levy rate is applied to taxable sales revenue, and VAT shall be levied at a reduced rate of 1%. For prepaid VAT items subject to a 3% pre-collection rate, prepaid VAT shall be collected at a reduced pre-collection rate of 1%.
This announcement shall be valid until December 31, 2027.
Q: What is the latest preferential income tax policy for small thin-profit enterprises?
Until December 31, 2027, small thin-profit enterprises will enjoy taxable income calculation at a reduced rate of 25% and income tax at a rate of 20%.
Q: What is the latest policy on enterprise income tax for venture capital firms and angel investment individuals investing in start-up technology enterprises?
Start-up technology enterprises which have no more than 300 employees and no more than 50 million yuan in both total assets and annual sales revenue could continue to enjoy the preferential policies until December 31, 2027.
Q: What is the preferential policy on individual income tax for self-employed households?
From January 1, 2023 to December 31, 2027, the scope of annual taxable income for self-employed households subject to half reduction on individual income tax will be expanded from no more than 1 million yuan to no more than 2 million yuan.
Q: How to deal with the prepaid individual income tax which is done before the tax incentives are introduced?
Self-employed households who have paid individual income tax in the first few months of this year can also enjoy the tax incentives. According to the State Taxation Administration Announcement No. 12, taxpayers who have paid the taxes that should be exempted before the announcement's publication can apply for a tax refund.
They can also choose to automatically deduct the taxes for the following months, and any remaining amount that cannot be deducted within the year will be refunded during the annual settlement.
However, for those who have canceled the registration before the No. 12 announcement was published, the incentives can not be retroactively enjoyed.
Q: What is the quota of the tax deduction for start-up businesses owned by people who are on the poverty alleviation list?
From January 1, 2023 to December 31, 2027, for those who are self-employed and on the poverty prevention list, their actual taxable VAT, urban maintenance and construction tax, education surcharges, local education surcharges and individual income tax for the current year shall be deducted in sequence within three years (36 months), with a limit of 20,000 yuan per household per year, starting from the month of registering as self-employed households.
The limit could be increased by a maximum of 20%, and the governments of provinces, autonomous regions and municipalities directly under the central government may determine the specific standard within this range according to the actual conditions in their respective regions.
Q: What is the preferential policy for enterprises hiring people who are on the poverty alleviation list?
From January 1, 2023 to December 31, 2027, enterprises hiring people on the poverty alleviation list with at least one year contracts and lawfully paying social insurance for them are eligible to receive deductions on VAT, urban maintenance and construction tax, education surcharges, local education surcharges, individual income tax and enterprise income tax in sequence based on the actual number of employed individuals within three years, since the labor contract are signed and social insurance paid.
The flat-rate standard is 6,000 yuan per person per year, with a maximum increase of 30%. The governments of provinces, autonomous regions and municipalities directly under the central government may set specific flat-rate standards within this range in accordance with the actual conditions in their respective regions.
Q: What are the reduction policy on "six taxes and two fees?"
From January 1, 2023 to December 31, 2027, for small-scale VAT taxpayers, small and thin-profit enterprises and self-employed households, the reduction of resource tax (excluding water resource tax), urban maintenance and construction tax, house property tax, urban and township land use tax, stamp tax (excluding securities transaction stamp), farmland occupation tax, education surcharges and local education surcharges is 50%.
Q: Are there any tax incentives for companies to hire retired soldiers?
From January 1, 2023 to December 31, 2027, for enterprises that hire retired soldiers and sign labor contracts with them for at least one year and lawfully pay social insurance for them, they will receive deductions on VAT, urban maintenance and construction tax, education surcharges, local education surcharges and enterprise income tax in sequence based on the actual number of hired retired soldiers within 3 years, starting from the month the labor contract is signed and social insurance is paid.
The flat-rate standard is 6,000 yuan per person per year, with a maximum increase of 50%, and the governments of provinces, autonomous regions and municipalities directly under the central government may set specific flat-rate standard within this range in accordance with the actual conditions in their respective regions.
Q: What is the latest tax policy for self-employed retired soldiers?
From January 1, 2023 to December 31, 2027, for self-employed retired soldiers, starting from the month of registering as self-employed households, they will receive deductions on actual taxable VAT, urban maintenance and construction tax, education surcharges, local education surcharges and individual income tax within a limit of 20,000 yuan per household per year within three years (36 months).
The limit could be increased by a maximum of 20%, and the people's governments of provinces, autonomous regions and municipalities directly under the central government may set specific flat-rate standards within this range in accordance with the actual conditions in their respective regions.
Q: Do Chinese residents need to include their earnings from equity incentives such as stock options, stock appreciation rights, restricted stocks and equity rewards from listed companies into their comprehensive income?
No, they don't.
Q: How do Chinese residents calculate the individual income tax after they get equity incentives such as stock options, stock appreciation rights, restricted stocks and equity rewards from listed companies?
Before December 31, 2027, tax residents who get equity incentive income from listed companies shall not include it in their comprehensive income of the year. The full amount is subject to the separate comprehensive income tax rate schedule for tax calculation. The calculation formula is:
Tax payable = equity incentive income × applicable tax rate - quick deduction
If the tax resident gets equity incentives two times or more in a tax year, the tax shall be calculated in combination on a consolidated basis.
Q: How to calculate and pay individual income tax when an individual obtains a one-time yearly bonus?
By December 31, 2027, resident individuals who obtain a one-time yearly bonus, which is in accordance with the regulations outlined in the "Notice of the State Taxation Administration on Adjusting the Method of Calculating and Collecting Individual Income Tax on Individuals Obtaining One-time Bonuses for the Whole Year" (Guo Shui Fa [2005] No. 9), can claim it not be included in the comprehensive income of the current year.
The amount of the one-time bonus income should be divided by 12 months and the tax should be calculated separately. The applicable tax rate and quick deduction are determined by the monthly-converted comprehensive income tax rate table.
The calculation formula is:
Tax payable = annual one-time bonus income × applicable tax rate - quick deduction
Resident individuals who obtain a one-time yearly bonus can also choose to include it in the comprehensive income of the current year for tax calculation.
Q: Can foreigners who meet the conditions of tax residents enjoy the tax-free benefits such as housing subsidies, language training and children's education fees, as well as special additional deductions at the same time?
Until December 31, 2027, foreign individuals who meet the conditions of Chinese tax residents may choose to enjoy special additional deductions for individual income tax, or tax-free benefits such as housing subsidies, language training and children's education fees, but they cannot enjoy both at the same time.
Once they make their choice, they cannot change it within a tax year.