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CIT Low as 2.5% in China!中国的企业所得税低至2.5%!

When you search key words such as “China” and “Tax”, it is very easy to find out the comments saying that China is a heavily taxed country especially on enterprises. This can be shown in the latest PWC statistics chart.

The nominal Corporate Income Tax (CIT) is 25%. However, when you look closely into the latest tax policies especially on small and median sized enterprises, the CIT is very low. Let’s have a look of the specifics:


CIT incentives for small and low-profit enterprises (SLPEs)


China has recently enhanced its inclusive tax cut policy for small and low-profit enterprises. SLPEs refer to enterprises engaged in non-restrictive and non-prohibited businesses that meet the following three conditions:

●Annual taxable income not exceeding RMB 3 million (approx. US$458,500);

● Number of employees not exceeding 300; 

●Total asset value not exceeding RMB 50 million (approx. US$7.7 million).


● 年应纳税所得额不超过300万元人民币(约45.85万美元);

● 员工人数不超过300人;

● 总资产价值不超过5000万元人民币(约770万美元)。


All types of SLPEs in China are able to enjoy a reduced corporate income tax (CIT) rate of 20 percent in combination with a reduction of their tax base.


Specifically, SLPEs are subject to:

● 20 percent CIT rate on 12.5 percent of the taxable income amount for the portion of taxable income not exceeding RMB 1 million (approx. US$152,800) (effective from Jan. 1, 2021-Dec. 31, 2022); 

● 20 percent CIT rate on 25 percent of their taxable income amount for the portion of taxable income more than RMB 1 million but not exceeding RMB 3 million (effective from Jan. 1, 2022-Dec. 31, 2024)


● 应纳税所得额不超过100万元人民币(约15.28万美元)的部分,按应纳税所得额的12.5%计算20%的企业所得税税率(自2021年1月1日至2022年12月31日生效);

● 对于应纳税所得额超过100万元但不超过300万元的部分,按其应纳税所得额的25%征收20%的企业所得税税率(自2022年1月1日至2024年12月31日生效)

As a result, for an SLPE’s taxable income amount up to RMB 1 million, an effective 2.5 percent CIT rate applies; for the portion of taxable income between RMB 1 million and RMB 3 million, an effective 5 percent CIT rate applies.


Because the SLPE evaluation is carried out at the entity level (instead of at the group level), small subsidiaries of foreign multinational enterprises (MNEs) in China can also benefit from these CIT cuts.


It is clear that for SLPEs current effective tax rate is very favourable. In addition to VAT exemption we discussed in the last article, taxation shall not be your concern when considering starting a SME in China.


Our point is, after you registered an enterprise in China as a start up, don’t worry about booking your expenses and loss on your company account, and don’t hesitate to inject capital from overseas to cover your expenses. It is common for start up to have limited or zero income but all costs. As owner and employee, you can also withdraw salary as part of your business cost.





All that activities will not affect your company tax status. Of course if your salary to be paid by your company account, then individual income tax is applicable.


In the end, Reindeer Station kindly advice to run the business by engage in some activities, presenting normal operation rather than total silence after registration.




宁波灵达商务服务有限公司    备案号:2020037656号-2