To stimulate the economy and lighten the burden of enterprises, especially manufacturers and small businesses, Chinese Finance Minister Xiao Jie has announced 350 billion yuan ($50.7 billion) in corporate tax breaks this year.
Small and micro firms with an annual taxable income of less than CNY500,000 are all eligible to pay just half of their income taxes assessed.
Under previous tax regimes, only businesses with an annual taxable income of less than CNY300,000 were eligible to enjoy such tax breaks.
Companies will also be permitted to deduct more research and development costs from taxable income, a measure intended to support research-oriented startups.
Xiao also announced plans to cut the value-added tax that fully supplanted the old sales-based business tax in 2016. The system now taxes gross profit -- or sales minus the cost of goods sold -- at 6%, 11%, 13% or 17%, depending on industry.
Firms saved more than US$73 billion (CNY500 billion) in taxes last year and are expected to save an additional CNY350 billion in taxes this year. This, combined with fee-reduction policy, will help companies save about CNY550 billion in taxes and fees directly this year.