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China’s finance ministry unveiled measures to help small businesses as part of efforts to bolster the post-Covid economic recovery.
The tax measures implemented in January, which were supposed to expire at the end of the year, would be extended by four years to end-2027, said the Ministry of Finance on Wednesday.
These measures exempted small companies whose monthly sales revenue is below 100,000 yuan ($13,923) from paying value-added taxes, while small firms which were supposed to pay a 3% value-added tax had the rate lowered to 1%.
The ministry also said interest income earned by financial institutions when issuing loans to small and micro companies in China would be exempted from value added taxes. It also exempted loan contracts with small firms from stamp duties.
In a separate statement, the finance ministry said that personal income taxes will be halved for individuals who run their own small businesses with less than 2 million yuan in annual taxable income.
It also exempted small and micro companies from resource taxes, property taxes, stamp taxes and some other administrative fees and cut taxes for micro firms which are supposed to pay a 25% rate to 20%. These measures will be in place until end-2027, it said.
The measures came after Beijing rolled out a slew of policies to support the private sector, which is seen as a key to providing jobs to young workers and boosting confidence in the world’s second-largest economy.