Enterprise income tax rates will be reduced for eight industries
by different margins, according to a statement from the State
Administration of Taxation issued on September 17. The new rates
will go into effect as of January 1, 2008.
According to the statement, tax rates for entertainment,
catering, retail and wholesale industries will be reduced
significantly.
However, the nation's top taxation regulator repeated that in the
meantime enterprises engaged in real estate development would
remain at their original tax rate.
Beijing taxation authorities revealed that some 20,000
enterprises would benefit from the new policy.
Although the new rates will not come into effect until next
year, the measure has been warmly acclaimed nationwide. A small
restaurant owner in Beijing's Chongwen District said that she
formerly thought it difficult to run her business. After hearing
the news she felt more confident because the government had
provided her with the policy.
When the new rates go into effect, for example, a small
restaurant with a monthly income of 100,000 yuan will save 6,600
yuan in enterprise income taxes.
"After analyzing statistics from different industries and
regions, we found that the tax rate is comparatively higher for
smaller enterprises," an official in charge of enterprise income
tax in the State Administration of Taxation was quoted as saying in
an interview. "So we decided to reduce the tax rate and lower the
burden of these smaller enterprises."
Currently in China, there are a large number of small
businesses. Their taxes account for only a small portion of the
nation's total tax revenue. Reducing small business tax will not
lead to an overall reduction of national tax revenue. In fact, the
lowered tax rate is expected to stimulate the enthusiasm of small
business owners.
According to available statistics by the end of June 2006, there
were over 4.3 million small and medium-sized enterprises registered
with government revenue authorities. The total value they produced
accounted for nearly 60 percent of the nation's GDP. Their taxes
supplied nearly 50 percent of nation's tax revenue.
Appendix: Taxable Income Rate of 8 Industries
| Industry |
Taxable Income Rate (%) |
| Agriculture, Forestry, Husbandry and Fishing |
3-10 |
| Manufacturing |
5-15 |
| Wholesale and Retail Business |
4-15 |
| Communications and Transportation |
7-15 |
| Construction |
8-20 |
| Catering |
8-25 |
| Entertainment |
15-30 |
| Others |
10-30 |
(China.org.cn by Chen Xia, September 18,
2007)
