China COVID-19 Relief: Maximum 50% Reduction on “Six Local Tax and Two fees”

50% Reduction is available to VAT Small-Scale Taxpayers, Small Low-Profit Enterprises and Individual Industrial and Commercial Household only

In March 2022, the State Taxation Administration announced a maximum of 50% Tax Reduction from 1 January 2022 to 31 December 2024 on the following Local Tax and fees:-

•    Resource Tax
•    City Maintenance and Construction Tax
•    Real Estate Tax
•    Urban and Township Land Use Tax
•    Stamp Duty ( Excluding Stock Trading Stamp Duty)
•    Farmland Occupation Tax
•    Educational Surcharge 
•    Local Education Surcharge

This Tax Relief is available to following entities:-

•    VAT Small-Scale Taxpayers
•    Small Low-Profit Enterprises
•    Individual Industrial and Commercial Household

Even when the Taxpayers have already enjoyed other benefits in the above type of tax and fee, the Taxpayers are still eligible to enjoy this Tax Relief.

There is no requirement for the Taxpayers to submit additional information to apply for this tax relief. The system will automatically calculate the tax liabilities at a reduced rate.

Reference:http://www.gov.cn/fuwu/2020-06/08/content_5518012.htm 

Points to note:

The Tax Relief is going to significantly reduce the Tax Burden of Small-medium Sized Enterprise in China. As such, it is important to review the Definition of VAT Small-Scale Taxpayers and Small Low-Profit Enterprises.

VAT Small-Scale Taxpayers
The Annual Sales of VAT Small-Scale Taxpayers cannot exceed RMB 5 Million. If the entity has already selected itself to be General Taxpayer in VAT, it is not allowed to change back to Small-Scale Taxpayers under normal circumstances.

Small Low-Profit Enterprises
All of the following conditions have to be fulfilled at the same time:-
•    Does not engage in restricted or prohibited business;
•    The amount of Assessable Profits does not exceed RMB 3 million;
•    The number of staff does not exceed 300; and
•    The amount of asset does not exceed RMB50 million.

Taxpayers are advised to check thoroughly the criteria of each Tax Relief and monitor closely their business size in order to ensure that they are qualified for the Tax Relief.