Recent Important Regulation Highlight

published on 22 May 2023 | reading time approx. 2 minutes

Update to Tax Benefits 2023

The prevailing tax benefits in 2023 are summarized in China Newsletter Issue February 2023. Recently, the State Taxation Administration (“STA”) updates the preferential regulation on Corporate Income Tax (“CIT”) of Small and Micro Enterprises (“SME”) and the Super Deduction:

SMEs are taxed on 25 percent of the taxable income less than RMB 1 million at a reduced rate of 20 percent from 1 January 2023 to 31 December 2024 (with effective tax rate of 5 percent);
From 1 January 2023, the actual R&D expenses incurred by enterprises in conducting R&D activities, which do not constitute intangible assets but are recognized in profit and loss for the current period, can be deducted before CIT on actual basis and with further 100 percent of the actual cost incurred; while R&D expenses that form intangible assets will be amortized before CIT at 200 percent of the cost during the above period.

E-Tax Platform Launches “Cross-border Taxation for Non-Residents”

Non-resident enterprises do not have institutions or premises in China, but shall file tax returns and pay taxes in China for the income sourced from China. After the launch of “Cross-border Taxation for Non-Residents", non-resident enterprises located abroad can process relevant tax formalities online via the Chinese E-Tax Platform, and can choose various methods to complete tax payment, such as UnionPay and cross-border remittance.

Special Credit Reports with Tax-Related Certificates

Recently, the Shanghai Government has promoted the implementation of “replacing the certificate of no violation of law with special credit report”. Enterprises can apply special credit reports on the website of “Credit China (Shanghai)”. The contents covered by the credit report also include the taxation information, which greatly facilitates enterprises that need tax-related certificates for non-violations.