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Guangzhou Releases Circular to Promote Development of MSMEs

By Dezan Shira & Associates
Posted: 21st November 2012 10:12
The Guangzhou People’s Government released the “Circular on Several Policies to Promote the Development of Micro, Small and Medium-sized Enterprises (MSMEs) (shuifu [2012] No.34, hereinafter referred to as ‘Circular’)” on November 1, which clarifies the preferential policies on supporting the development of MSMEs in the city. Detailed information can be found below.

Main contents of the preferential policies for MSMEs

Corporate income tax for small meager-profit enterprises shall be levied at a reduced rate of 20 percent if such enterprises engage in industries not restricted or prohibited by the State and are:
  • Industrial enterprises whose annual taxable income is not over RMB300,000, whose number of employees is no more than 100, and whose total assets are not over RMB30 million; or
  • Other enterprises whose annual taxable income is not over RMB300,000, whose number of employees is no more than 80, and whose total assets are not over RMB10 million.

For micro meager-profit enterprises whose annual taxable income is not over RMB60,000, the taxable income thereof shall be calculated at 50 percent of their actual income and the corporate income tax payable shall be subject to a tax rate of 20 percent.

The portion of income that does not exceed RMB5 million obtained by a small and medium-sized enterprise (SME) from a technology transfer shall be exempted from corporate income tax, and the excess thereof shall be taxed at a half rate.

Where a venture capital enterprise invests in an unlisted high-tech SME for over two years by way of equity investment, it may deduct 70 percent of its investment from its taxable income for the year when its equity holding period reaches two full years. Where the amount of the investment is insufficient to offset its income tax in the current year, the excess may be carried forward to future tax years.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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