On November 1, 2022, the "Regulations on Promoting the Development of Individual Business Enterprises" was officially implemented. At the time of the implementation of the "Chongding Hot Search" in the new article, many people may have had the idea of starting a self-employed business. Both individual businesses and small low-profit enterprises, which are also important components of the real economy, attract a large number of investors. Here, the author and readers, from the perspective of tax preferential policies, will look at the "tax refund, tax reduction, exemption, and deferred payment" policies that individual businesses and small low-profit enterprises can enjoy.

1、 Periodic exemption from value-added tax

According to the provisions of the Announcement of the Ministry of Finance and the State Administration of Taxation on the Exemption of Value-Added Tax on Small Scale Taxpayers (No. 15, 2022) and the Announcement of the State Administration of Taxation on the Exemption of Value-Added Tax and Other Collection Management Matters for Small Scale Taxpayers (No. 6, 2022), from April 1, 2022 to December 31, 2022, small scale VAT taxpayers are exempt from value-added tax by applying a taxable sales income rate of 3%; For VAT prepaid projects that apply a 3% prepayment rate, withholding VAT will be suspended.

2、 Ending VAT deduction and refund

According to the provisions of the Announcement of the Ministry of Finance and the State Administration of Taxation on Further Enhancing the Implementation of the Ending VAT Deduction and Refund Policy (No. 14, 2022), the Announcement of the Ministry of Finance and the State Administration of Taxation on Further Accelerating the Implementation Progress of the Ending VAT Deduction and Refund Policy (No. 17, 2022), and the Announcement of the State Administration of Taxation on Further Enhancing the Implementation of the Ending VAT Deduction and Refund Policy (No. 4, 2022), Taxpayers of eligible small and micro enterprises (including individual businesses) can apply to the competent tax authorities for refunding the incremental tax credits from the April 2022 tax filing period.

3、 Additional deduction for R&D expenses of high-tech SMEs

According to the provisions of the Announcement of the Ministry of Finance, the State Administration of Taxation, and the Ministry of Science and Technology on Further Improving the Pre tax Deduction Ratio of R&D Expenses for Scientific and Technological SMEs (Announcement No. 16, 2022, issued by the Ministry of Finance, the State Administration of Taxation, and the Ministry of Science and Technology), if the R&D expenses actually incurred by scientific and technological SMEs in carrying out R&D activities are not included in the current profit and loss as intangible assets, on the basis of deduction according to the regulations, starting from January 1, 2022, And deduct 100% of the actual amount before tax; As of January 1, 2022, intangible assets formed shall be amortized at 200% of the cost of intangible assets before tax.

4、 Reduction of income tax on small and micro enterprises

According to the Announcement of the State Administration of Taxation of the Ministry of Finance on Implementing the Preferential Policies for Income Tax of Small and Micro Enterprises and Individual Businesses (No. 12, 2021), the Announcement of the State Administration of Taxation on Implementing the Preferential Policies for Supporting the Development of Small and Micro Profit Enterprises and Individual Businesses (No. 8, 2021), and the Announcement of the State Administration of Taxation of the Ministry of Finance on Further Implementing the Preferential Policies for Income Tax of Small and Micro Enterprises (No. 13, 2022) According to the provisions of the Announcement of the State Administration of Taxation on the Collection and Administration of Preferential Income Tax Policies for Small and Micro Profit Enterprises (No. 5, 2022), from January 1, 2021 to December 31, 2022, the portion of the annual taxable income of small and micro profit enterprises that does not exceed 1 million yuan shall be included in the taxable income at a reduced rate of 12.5%, and the enterprise income tax shall be paid at a tax rate of 20%. From January 1, 2022 to December 31, 2024, the portion of the annual taxable income of small low-profit enterprises that exceeds 1 million yuan but does not exceed 3 million yuan 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%.

5、 Reduction of individual income tax for individual business operators

According to the provisions of the Announcement of the State Administration of Taxation of the Ministry of Finance on Implementing the Preferential Policies for Income Tax of Small and Micro Enterprises and Individual Business Enterprises (No. 12, 2021) and the Announcement of the State Administration of Taxation on Implementing the Preferential Policies for Income Tax of Supporting the Development of Small and Micro Profit Enterprises and Individual Business Enterprises (No. 8, 2021), from January 1, 2021 to December 31, 2022, the annual taxable income of individual business enterprises shall not exceed 1 million yuan, On the basis of the current preferential policies, the individual income tax will be reduced by half.

6、 Reduce local "six taxes and two fees"

According to the provisions of the Announcement of the Ministry of Finance and the State Administration of Taxation on Further Implementing the "Six Taxes, Two Fees" Reduction Policy for Small and Micro Enterprises (No. 10, 2022), from January 1, 2022 to December 31, 2024, the people's governments of provinces, autonomous regions, and municipalities directly under the Central Government can determine, based on the actual situation of their respective regions and the needs of macro control, that small and micro profit enterprises and individual businesses can be reduced by 50% of the tax amount of resource tax, urban maintenance and construction tax Real estate tax, urban land use tax, stamp tax (excluding securities transaction stamp tax), farmland occupation tax, education surcharge, and local education surcharge. Small low-profit enterprises and self-employed businesses that have legally enjoyed other preferential policies such as resource tax, urban maintenance and construction tax, real estate tax, urban land use tax, stamp tax, farmland occupation tax, education surcharge, and local education surcharge can enjoy this preferential policy in addition.

7、 Pre-tax deduction preference for small and medium-sized enterprises to purchase equipment and appliances

According to the provisions of the Announcement of the Ministry of Finance and the State Administration of Taxation on the Relevant Policies for the Pre-tax Deduction of Equipment and Appliances for Small and Micro Enterprises (No. 12, 2022), small and micro enterprises that newly purchased equipment and appliances between January 1, 2022 and December 31, 2022, with a unit value of more than 5 million yuan, voluntarily choose to deduct the equipment and appliances before the enterprise income tax according to a certain proportion of the unit value. Among them, 100% of the unit value of equipment and appliances with a minimum depreciation period of 3 years specified in the implementation regulations of the Enterprise Income Tax Law can be deducted before one-time tax in the current year; If the minimum depreciation period is 4, 5, or 10 years, 50% of the unit value can be deducted before tax in a one-time manner in the current year, and the remaining 50% can be calculated and deducted before tax in the remaining years according to regulations. If an enterprise chooses to apply the above policies for losses that are not deducted in the current year, they can be carried forward to make up for the losses in the next five tax years. Enterprises that enjoy other policies to extend the loss carrying forward period can implement the current regulations.

8、 Periodic deferred payment of corporate social insurance premiums

According to the "Notice of the Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Administration of Taxation on Doing a Good Job in Stabilizing Unemployment Insurance, Improving Skills, and Preventing Unemployment" (RSBF [2022] No. 23), and the "Notice of the General Office of the Ministry of Human Resources and Social Security, the General Office of the State Administration of Taxation, on Implementing the Policy of Delaying the Payment of Corporate Social Insurance Premiums in Extremely Poor Industries" (RSTF [2022] No. 16), 1. For catering, retail, tourism, civil aviation Highway, waterway, and railway transportation enterprises have implemented a phased moratorium on the payment of basic old-age insurance premiums, unemployment insurance premiums, and work-related injury insurance premiums for enterprise employees. The period of deferred payment of basic old-age insurance premiums for enterprise employees is from April to June 2022; The period of deferred payment of unemployment insurance premium and industrial injury insurance premium is from April 2022 to March 2023. During this period, enterprises can apply for deferral of payments for different periods. Enterprises that have already paid the fees due in April 2022 can apply for a delay in payment starting from May, with the corresponding month of delay being extended for one month, or can apply for a refund of the April fees. No late fee will be charged during the period of deferred payment. "Individual business households and various types of flexible employment personnel who participate in the basic old-age insurance for enterprise employees in their personal capacity can voluntarily postpone payment if they have difficulty paying in 2022. Monthly unpaid contributions in 2022 can be made up by the end of 2023. The payment base is independently selected within the upper and lower limits of the local individual payment base in 2023, and the payment period is calculated cumulatively.".

9、 Temporary exemption from employment security fund for the disabled

According to the provisions of the Announcement of the Ministry of Finance on Adjusting the Policies for the Collection of Employment Security Funds for Persons with Disabilities (No. 98, 2019), from January 1, 2020 to December 31, 2022, enterprises with an active workforce of 30 or less will be temporarily exempted from the collection of employment security funds for persons with disabilities.

10、 Reduction of construction fees for cultural undertakings

According to the provisions of the "Notice of the Ministry of Finance on Adjusting the Relevant Policies of Some Governmental Funds" (CS [2019] No. 46), from July 1, 2019 to December 31, 2024, the construction fees for cultural undertakings attributable to central revenue shall be reduced by 50% of the amount payable by the payer; The finance and party committee propaganda departments of each province (district, city) can reduce the construction fee for cultural undertakings that belongs to local income within a range of 50% of the payable amount, taking into account factors such as the local economic development level, the development of propaganda, ideological and cultural undertakings, and so on.

Thinking summary

The recently implemented "Regulations on Promoting the Development of Individual Industrial and Commercial Households" clarify the market and legal status of individual industrial and commercial households, make their market subject status clearer, and strengthen the protection of their legitimate rights and interests. The regulations provide for registration services, annual reporting services, various information services, precision assistance, business premises supply, as well as capital, finance and taxation, finance, social security, entrepreneurship and employment, community convenience, digital development, intellectual property protection, and relief assistance, providing comprehensive support for the development of individual businesses. At the same time, the regulations also put forward new requirements for the compliance operation of individual businesses.

Both individual businesses and small and micro enterprises are important components of China's real economy, and are important forces in participating in and promoting the development of the real economy. They have played a positive role in stabilizing employment, protecting people's livelihood, and prospering the market. Whether it is individual businesses or small and micro enterprises, the state has provided sufficient and practical tax preferential support. Relevant market participants should recognize that "making full use of national tax support is the true 'tax saving', and it is imperative to operate in compliance.".