To further support the development of Small Meagre-profit Enterprise, the Ministry of Finance and the State Administration of Taxation issued a series of announcements in early 2022 to reduce the burden on enterprises. Since these preferential policies are mainly issued for Small Meagre-profit Enterprises which including local companies and WFOE, so StartChinaBusiness would like to share with you on what is Small Meagre-profit Enterprise? Are you eligible to enjoy these preferential policies?

For Chinese version, please refer to below link:
http://www.startchinabusiness.com/cn/2022vat/

The criteria for Small Meagre-profit Enterprise:
1. Industry: Engaged in non-restricted and prohibited industries
2. Annual taxable income/ Profit: No more than RMB 3 million
3. Number of employees: No more than 300
4. Total Assets: No more than RMB 50 million

Key points summarized by StartChinaBusiness:
VAT 3% was exempted!
1. Effective period: Apr 1st, 2022 to Dec 31st, 2022
2. It’s only available for Smaller Scale Taxpayer, whose annual sales (sales for 12 consecutive months) must lower than RMB 5 million.
The General Tax Payer cannot enjoy this preferential policy.
3. As Smaller Scale Tax Payer, you can issue Normal VAT Fapiao without VAT (FREE), the Maximum amount is RMB 5 million.
4. When you issue Normal VAT Fapiao, please choose Free of VAT, but not 0% VAT.
5. If you need to issue Professional VAT Fapiao, the VAT rate is 3%, cannot enjoy VAT exemption.
6. For some business with 5% VAT, please keep the 5% VAT same, cannot enjoy this preferential policy.
7. This preferential policy is for VAT exemption only, no relation to Enterprise Income Tax (Profit tax).

Legal support:
Notice on the Exemption of Value-Added Tax for Small-Scale Taxpayers
Announcement No.15, 2022 of the Ministry of Finance& State Administration of Taxation