China’s tax policy framework for 2012 largely focuses on reducing taxes for both individuals and small businesses to maintain economic growth and stability.
Sunnyvale, CA -- (SBWIRE) -- 01/24/2012 -- China’s tax policy framework for 2012 largely focuses on reducing taxes for both individuals and small businesses to maintain economic growth and stability. China’s Ministry of Finance presented the tax policy framework for 2012 during the National Finance Work Conference in Beijing.
Tax incentive for small low-profit enterprises extended
In 2011, the income tax threshold for individuals had been raised from RMB2000 (USD315) to RMB3500. Micro businesses and small-sized enterprises (with an annual taxable income of less than RMB60,000) will benefit this year with 50% of its taxable income subject to a reduced corporate income tax rate of 20%. The tax reduction will apply from January 1, 2012 to December 31, 2015.
The measures are aimed at helping smaller firms deal with increased costs of doing business. China plans to keep its import taxes low in 2012 to encourage imports and meet consumer demand while also promoting balanced foreign trading relationships.
China import taxes reduced
The Chinese government also announced plans to reduce import taxes to 4.4 % for over 730 goods which is less than half the rate by the World Trade Organization standards for a country that rules the world’s export/import business. Energy and natural resources, agricultural products and high-technology equipment will be the most favored segments for imports.
The government also has plans to formulate new policies for resources, consumption and property taxes.
China Value Added Tax
Last year, China had announced a pilot scheme to replace the existing business tax on the country’s service sector with value added tax in Shanghai, which if successful, would be extended nationwide.
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