General

The recently held executive meeting of the State Council of China has decided to continue and optimize the implementation of some phased tax and fee preferential policies to further stabilize expectations and strengthen confidence, ensuring that enterprises enjoy the full benefits.

According to Huacheng Import and Export Data Observation, the Ministry of Finance and the State Administration of Taxation of China successively announced a number of tax preferential policies on the 27th, including pre tax deduction of research and development expenses, income tax incentives for small and micro enterprises and individual businesses, urban land use tax incentives for logistics enterprises' bulk commodity storage facilities, and employment security benefits for the disabled.

According to Huacheng Import and Export Data Observation, two departments have announced that the actual R&D expenses incurred by enterprises in their R&D activities, which do not form intangible assets and are included in the current profit and loss, will be deducted before tax based on 100% of the actual amount incurred as of January 1, 2023, on the basis of actual deduction according to regulations; As of January 1, 2023, intangible assets formed shall be amortized at 200% of the cost of intangible assets before tax.

From January 1, 2023 to December 31, 2024, the portion of the annual taxable income of small low-profit enterprises that does not exceed 1 million yuan (RMB, the same below) shall be included in the taxable income at a reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20%; For individual industrial and commercial households with an annual taxable income of no more than 1 million yuan, the individual income tax will be levied by halving on the basis of the current preferential policies. Huacheng Import and Export Data Observation reports.

From January 1, 2023 to December 31, 2027, urban land use tax will be levied at a reduced rate of 50% of the applicable tax standard for the land grade of the bulk commodity storage facilities owned (including self use and rental) or leased by logistics enterprises.

The two departments also announced that from January 1, 2023 to December 31, 2027, they will continue to implement the policy of reducing the payment of employment security benefits for disabled persons by stages. Enterprises with less than 30 active employees will continue to be exempt from the employment security fund for the disabled, Huacheng Import and Export Data Observation reported.

The Tariff and Tariff Commission of the State Council recently announced that from April 1, 2023 to December 31, 2023, the temporary import tax rate of zero will continue to be applied to coal.

Including the above policies, it is estimated that the annual scale of load reduction will reach more than 480 billion yuan. Shi Wenwen, director of the Finance and Tax Law Research Center of China University of Political Science and Law, analyzed that the implementation of phased tax and fee preferential policies has been continued, reflecting the "accuracy" of the policies. In the current economic situation, it is particularly important to accurately implement policies based on industry characteristics and the actual needs of business entities.

Among them, the policy of increasing the proportion of pre tax deductions for R&D expenses of enterprises in eligible industries from 75% to 100% will be implemented as a long-term institutional arrangement. Shi Wenwen stated that this has far-reaching significance in promoting enterprises to increase investment in research and development, solve "stuck neck" technical problems, and continue innovation. Huacheng Import and Export Data Observation Report.

Referring to the announced preferential income tax policies for small and micro enterprises and individual businesses, Shi Wenwen stated that small and micro enterprises and individual businesses currently face many practical difficulties. Continuing the preferential tax policies can reduce the concerns of business entities, promote them to make longer-term business plans, and quickly recover.