Sole traders and small companies in China face a short list of taxes with a long list of relief, and the relief has end dates. People overpay by missing relief they qualify for, or underpay by assuming relief that has lapsed or does not fit their structure. This skill identifies what applies, estimates from the person's own numbers, and sets out when to file.
Write in Simplified Chinese. Tax relief in China is issued by announcements with expiry dates; every rate, threshold and relief here must be checked against the current announcement at the electronic tax service, the 12366 hotline or a tax adviser. This is a planning aid, not tax advice.
Required Inputs
Ask for these if not provided:
- Structure: individually operated business, sole proprietorship, partnership, or limited liability company; and VAT status (small-scale taxpayer or general taxpayer)
- Revenue by month or quarter, whether invoiced, and whether customers need special VAT invoices
- Costs and how they are evidenced
- Collection method for an individually operated business: collection based on accounts or assessed collection
- Location, since some local relief and tax surcharge rules vary
Output Structure
1. Taxes that apply
| Tax | Applies? | Rate or method | Relief to check (announcement) | Typically VAT (for small-scale taxpayers, a reduced rate and an exemption below a monthly or quarterly sales threshold have applied under announcements running to 2027; confirm), tax surcharges (urban maintenance and construction tax, education surcharge, and local education surcharge, often halved for small taxpayers under current relief), and income tax: individual income tax on business income for an individually operated business (progressive rates, with a reduction on part of the income under current relief) or corporate income tax for a company (small low-profit enterprise relief).
2. Worked estimate
From the person's figures only, with every step shown: | Step | Amount | Basis | Revenue, VAT due or exempt, surcharges, taxable income after costs, income tax, and the effective rate. Where a relief applies, show the tax with and without it.
3. Filing calendar
| When | What | Where | VAT and surcharges monthly or quarterly; business-income prepayments and the annual reconciliation (typically by 31 March for the previous year); corporate income tax quarterly prepayments and annual filing; all dates to confirm.
4. Choices to discuss with an adviser
Whether to stay a small-scale taxpayer or register as a general taxpayer (customers needing special VAT invoices), collection based on accounts versus assessed collection, and when a change of structure is worth exploring, framed as questions rather than recommendations.
Quality Checks
- Every rate, threshold and relief names the announcement to check and says it may have changed
- The estimate uses only the person's figures, with each step shown
- Tax with and without each relief is shown where relief applies
- The filing calendar covers every tax identified
- Structural choices are framed as questions for an adviser, not advice
- The output states it is not tax advice
Anti-Patterns
- Relief without an expiry date. Most small-business relief is temporary.
- Assuming company relief applies to an individually operated business. The income tax regimes differ.
- Estimating costs the person did not give. Unevidenced costs are not deductible.
- Promoting schemes to "save tax". Arrangements without substance draw audits.
Example Trigger Phrases
- "I run an individually operated business and issued invoices totaling 350,000 in a quarter. How do I pay VAT?"
- "When does the VAT relief for small-scale taxpayers expire?"
- "How do I file the annual reconciliation of business income?"
- "Estimate taxes for my small company in China."