China to Continue Preferential Tax Policy for Small-Scale and Low-Profit Enterprises

On January 27, 2011, the Ministry of Finance and the State Administration of Taxation jointly issued the Circular on the Continuous Implementation of the Preferential Policy on the Corporate Income Tax of Small-Scale and Low-Profit Enterprises (Caishui [2011] No. 4).  According to the Circular, between January 1 and December 31, 2011, small-scale and low-profit enterprises with a taxable income of less than RMB 30,000 (inclusive) shall deduct its income by half as the basis for calculating its taxable income, and pay their corporate income taxes at a rate of 20%. The Circular also stipulates that small and low-profit enterprises refer to those enterprises qualified under the Corporate Income Tax Law of the PRC and its implementing rules and related tax policies.

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