MTACジャパン List of News Articles

The number of employees includes the number of workers who have entered into labor relations with the company and the number of dispatched workers accepted by the company. The criteria for the number of employees and total assets are determined based on the quarterly average over the company's entire year. The specific calculation formula is as follows: Quarterly average = (Beginning of quarter + End of quarter) ÷ 2 Annual quarterly average = Total of annual quarterly averages ÷ 4 If a company starts or ends its business activities during the fiscal year, the actual business period will be considered the taxable year for determining the above-related criteria. The determination of small enterprises is based on the results of the final tax return. Newly established companies that are registered as general taxpayers for value-added tax, engage in industries not restricted or prohibited by the state, and simultaneously meet the two conditions of having 300 employees or fewer and total assets of 50 million yuan or less as of the end of the month prior to the reporting period can declare themselves as small enterprises before their first final tax return, thereby enjoying the preferential policies stipulated in Article 2.

To further support the development of small enterprises and individual business owners, the following policies regarding related taxes and fees are announced: 1. From January 1, 2023, to December 31, 2027, the individual income tax on the annual taxable income of individual business owners up to 2 million yuan will be halved. Individual business owners can enjoy this preferential policy in addition to other existing preferential policies related to individual income tax. 2. From January 1, 2023, to December 31, 2027, small-scale taxpayers, small enterprises, and individual business owners will have their collection or taxation of resource tax (excluding water resource tax), urban maintenance and construction tax, property tax, urban land use tax, stamp tax (excluding securities transaction stamp tax), cultivated land occupation tax, education surcharge, and local education surcharge halved. 3. The policy of paying corporate income tax by multiplying the annual taxable income amount by 25% and then by the small enterprise tax rate of 20% will be extended until December 31, 2027.

According to regulations, the corporate income tax rate of 5% for annual taxable income of 3 million yuan or less will be extended until December 31, 2027. 1. Targeted Enterprises: Small Enterprises (referred to as "small and low-profit enterprises" in Chinese) A small enterprise is defined as one that meets all of the following four criteria: ● Not engaged in businesses that are restricted or prohibited by the state. ● Annual taxable income of 3 million yuan or less. ● Number of employees not exceeding 300. ● Total assets not exceeding 50 million yuan. 2. Target Period, Range of Annual Taxable Income, and Corporate Income Tax Rate Target Period: From January 1, 2023, to December 31, 2027 (five years) Range of Annual Taxable Income: 3 million yuan or less Corporate Income Tax Rate: The corporate income tax rate is 5% Announcement on tax and fee policies to further support the development of small enterprises and individual business owners (Ministry of Finance, State Taxation Administration Announcement No. 12 of 2023)

If all four requirements for small businesses are not met, preferential policies will not apply, and the standard corporate income tax rate of 25% will be applied. Even if three of the four requirements are met, if the annual taxable income exceeds 3 million yuan, it will not qualify as a small business. Similarly, if the annual taxable income exceeds 3 million yuan due to adjustments in the taxable income during the corporate income tax declaration, it will also no longer be considered a small business. Example 1: If the annual taxable income is 3 million yuan, the corporate income tax payable will be 150,000 yuan. 3 million yuan × 25% × 20% = 150,000 yuan or 3 million yuan × 5% = 150,000 yuan Example 2: If the annual taxable income is 3.01 million yuan, preferential policies will not apply, so the corporate income tax payable will be 752,500 yuan. 3.01 million yuan × 25% = 752,500 yuan The difference between Example 1 and Example 2 is only 10,000 yuan, but in Example 2, since preferential policies do not apply, the standard corporate income tax rate of 25% will be applied, resulting in a corporate income tax payable of 752,500 yuan. The difference from Example 1 is 602,500 yuan, which is a significant increase.