China Tax Cuts

China Briefing: China Announces US$55.2 billion in Tax Cuts
VAT system simplified
The number of VAT brackets will be reduced from four to three as of July 2017. As previously reported, the government will eliminate the 13 percent tax bracket, leaving only the 17 percent, 11 percent, and six percent brackets.

All products previously part of the 13 percent bracket will become part of the 11 percent bracket, namely: cereals and edible vegetable oils; tap water, heating, cooling, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal/charcoal products for household use; books, newspapers, magazines (excluding newspapers and magazines distributed by the Post Department); feed, chemical fertilizers, agricultural chemicals, agricultural machinery and plastic covering film for farming; agriculture, forestry, products of animal husbandry, aquatic products; audio-visual products; electronic publications; dimethyl ether; and edible salt.

...Tax cuts for low-profit enterprises have been extended to a wider range of companies. Enterprises with an annual income of RMB 500,000 (US$72,625) or less are eligible for a preferential corporate income tax (CIT) rate of 20 percent applied to only half of their taxable income, up from the previous cap of RMB 300,000 (US$43,575).

The standard CIT rate is 25 percent on all taxable income. The measure is valid from January 1, 2017 to December 31, 2019.

The measures also increase pre-tax deductions for SME tech firms from 50 percent to 75 percent for R&D costs incurred from the development of new technologies, products, and techniques. The expanded deductions are also valid from January 1, 2017 to December 31, 2019.

Furthermore, venture capital firms in certain regions can benefit from taxable income deductions on 70 percent of tech firm investment at the seed stage, the initial setup stage of a new business, as of January 1, 2017. Investments made up to two years prior to this date can also apply for this benefit. The eligible regions are Beijing, Tianjin, Hebei, Shanghai, Guangdong, Anhui, Sichuan, Wuhan, Xi’an, Shenyang, and the Suzhou Industrial Park.
iFeng: 财政部:7月1日起取消13%增值税税率

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