SIP Tax Bureau announced on Feb 2 that local micro and small enterprises (MSEs) with monthly sales no more than RMB 100,000 or quarterly sales no more than RMB 300,000 can be exempted from value-added tax (VAT). This enables the number of SIP-based MSEs benefiting from the VAT exemption policy to increase by over 4,300 to reach more than 40,000.

The announcement followed a series of national and provincial policies that took effect early this year to further reduce MSEs' tax burdens. Previously, only MSEs with monthly sales no more than RMB 30,000 or quarterly sales no more than RMB 90,000 can enjoy the VAT exemption.

According to the announcement, the tax break is based on the tax reports that taxpayers file through a tax declaration system which automatically subtracts the exempted part from the tax payable for eligible taxpayers.