Announcement of the State Taxation Administration on Tax Administration Issues Relating to the Preferential Income Tax Policy for Small and Low-Profit Enterprises
Announcement of the State Taxation Administration [2022] No. 5
March 22, 2022
To carry out the decision and arrangement of the CPC Central Committee and the State Council for implementing new combined tax support policies, to support the development of small and low-profit enterprises, and to effectively implement the preferential income tax policy for small and low-profit enterprises, the relevant tax administration issues are hereby announced as follows:
1. Enterprises qualified as small and low-profit enterprises (“SLPEs”) as stipulated by the Ministry of Finance and the State Taxation Administration are entitled to the preferential enterprise income tax (“EIT”) policy for SLPEs in accordance with relevant policy and regulations.
Where an enterprise has established any branch without the status of a legal person, the employees, asset values, and annual taxable incomes of the head organization and any such branch established shall be combined to determine whether the enterprise is qualified as an SLPE.
2. SLPEs are entitled to the preferential income tax policy for SLPEs regardless of whether they are subject to EIT on a book income or deemed income basis.
3. SLPE may benefit from the preferential income tax policy for SLPEs by filling out tax return forms when filing a prepayment or final settlement and payment of EIT.
4. When an SLPE files a prepayment of EIT, the indicators of the total assets, number of employees, and annual taxable income of the SLPE shall, for the time being, be determined as the case may be in the current year as at the end of the period for which the EIT prepayment filing is made.
5.If an enterprise previously not qualified as an SLEP is determined to be qualified as an SLEP according to the relevant policy and standards at the time when it files a prepayment of EIT during the current year, the amount of tax reliefs entitled by it shall be calculated as accrued as at the end of the period for which the EIT prepayment filing is made. Any excess EIT prepaid before the time during the year due to its non-qualification as an SLEP may be credited against the EIT amount to be prepaid in the subsequent quarter.
6. An enterprise who has benefited from the preferential income tax policy for SLPEs by the time of filing a prepayment of EIT but is found not qualified according to the relevant policy and standards at the time of the final settlement and payment of EIT, shall pay its underpaid EIT amount in accordance with regulations.
7. The prepayment of EIT on a quarterly basis shall apply uniformly to SLPEs.
If an enterprise who prepays EIT on a monthly basis is determined to be qualified as an SLEP according to the relevant policy and standards when it files a prepayment of EIT in April, July or October of the current year, the EIT prepayment filing period for the enterprise from the immediate following period will be adjusted to be quarterly, and once adjusted, cannot be changed within the current year.
8. This Announcement shall become effective on January 1, 2022. The Announcement of the State Taxation Administration on Issues Concerning the Implementation of the Policies on Inclusive Income Tax Reliefs for Small and Low-Profit Enterprises ([2019] No. 2) shall be abolished simultaneously.
The Announcement is hereby given.
