Tax Thursday: China – Premier’s Report of government work in 2021

The fourth session of the 13th National People’s Congress (NPC) opened at 9 am on March 5, 2021 at the Great Hall of the People. Premier Keqiang  Li reported on the work of the government (“the Report”) and indicated that some tax benefit policy shall be released since 2021.

Background

The Report mentioned that PRC regulation will continue implementing tax reduction policies to release the negative impact due to COVID-19, including but NOT limited to extend implementation periods of certain tax benefit policy, reduce tax burden for small and micro businesses and individual businesses and encourage enterprise innovation with continue or higher additional R&D expense deduction. •The government’s report stated the valid period of the preferential VAT policy for small-scale taxpayers shall extend and the VAT threshold shall be raised to 150,000 yuan from 100,000 yuan on monthly sales. •To improve the tax reduction policy, the government report also proposed that the part of annual taxable income of small and micro businesses and individual businesses, which is less than 1 million yuan, will be subject to additional 50% exemption on income tax on the basis of the current preferential policy. •The policy of 75% extra deduction for R&D expenses will be extended and the rate of additional deductions for manufacturing enterprises might raise to 100%.

To do

We will pay close attention to the release of the implementation documents of above relevant preferential policies for enterprises mentioned in the government work report. Crowe shall share and remind enterprises of the officially issued document from tax bureau and detailed requirement for implementation.

Questions

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