Recent Important Regulation Highlight

Further tax relief for small and micro enterprises

For small-scale VAT payers, the tax relief of reduced VAT rate of 1 per cent will be extended to 31 December 2021.

From 1 April 2021 to 31 December 2022, small-scale VAT payers with monthly sales of less than RMB 150,000 (inclusive) will be exempted from VAT.

From 1 January 2021 to 31 December 2022, the annual taxable income of SMEs, which is less than RMB 1 million, will be reduced by half at 12.5 per cent of the taxable income and subject to corporate income tax at a rate of 20 per cent.

Simplified and optimized tax filing procedures

Starting from 1 June 2021, taxpayers who are required to declare and pay urban land use tax, property tax, vehicle and vessel tax, stamp duty, arable land occupation tax, resource tax, land value-added tax, deed tax, environmental protection tax and tobacco tax may use the “Property and Conduct Tax Return Form” for combined declaration at one time or multiple times. If a taxpayer adds new tax sources or changes tax sources, it is necessary to submit the Detailed Statement of Property and Conduct Tax Sources before tax filing.

Tax refund of uncredited input VAT for the advanced manufacturing sector

The new announcement updates and clarifies that from 1 April 2021, eligible taxpayers in advanced manufacturing sectors engaged in the production and sale of "pharmaceuticals", "chemical fibers", "railways, ships, aerospace and other transport equipment ", "electrical machinery and equipment", "instruments and meters", and whose sales account for more than 50 per cent of their total sales, may apply to the responsible tax authority for their Uncredited Input VAT refund from May 2021.

Stamp Duty Law officially promulgated in China

On 10 June 2021, the NPC formally adopted the Stamp Duty Law of the PRC, which will come into effect on 1 July 2022. The enactment of the Stamp Duty Law indicates that the existing interim regulations on stamp duty and the relevant provisions of stamp duty on securities transactions will formally become law.

New regulations on super deduction of R&D expenses for manufacturing enterprises

On 31 March 2021, the MOF and the SAT jointly issued the Announcement on Further Improving the Policy on Extra Pre-tax Deduction of R&D Expenses. Starting from 1 January 2021, the proportion of R&D expenses for manufacturing enterprises to be deducted will be increased from 75 per cent to 100 per cent.