China will provisionally defer tax payment for micro, small and medium-sized enterprises (MSMEs) in the manufacturing sector to ease their operating difficulties, as decided on 29 October 2021 by an announcement of the State Tax Administration and the Ministry of Finance of the PRC. The relevant tax deferment measures announced are as follows:

1. MSMEs in the manufacturing sector are allowed to suspend, for a period of 3 months, the payments of enterprise income tax, domestic value added tax, domestic consumption tax, urban construction and maintenance tax, education surcharges and local education surcharges, incurred in the fourth quarter of 2021, which do not include the taxes paid when applying to the tax authorities for issuing invoices on behalf of them.
   
   
2. Manufacturing individual businesses, sole proprietorships and partnership enterprises are allowed to suspend, for a period of 3 months, the payments of individual income tax (excluding the withholding individual income tax) incurred in the fourth quarter of 2021.
   
   
3. Small and micro manufacturing enterprises (including individual businesses) whose annual sales revenue is less than RMB20 million can defer payments on all taxes for the fourth quarter of 2021.
   
   
4. Medium-sized manufacturing enterprises whose annual sales revenue is RMB20 million or more but less than RMB400 million can have 50% of their taxes deferred for the fourth quarter of 2021.
   
   
5. For enterprises that have been established for one year as of 30 September 2021, the annual sales revenue shall be the sales revenue from October 2020 to September 2021. For enterprises that have been established for less than one year as of 30 September 2021, the annual sales revenue shall be calculated as follows: the sales revenue of the corresponding period as of 30 September 2021 / actual operation month × 12 months. For enterprises established on or after 1 October 2021, the annual sales revenue shall be calculated as follows: the sales revenue of the first filing period / actual operation month ×12 months.
   
   
6. The above tax deferment measures came into effect on 1 November 2021.

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