Tax Savings for Small-Scale Taxpayers in the Second Half of 2026: Is the CNY 100,000 Monthly Exemption True?

One: VAT Exemption for Monthly Sales Below CNY 100,000, Let's Calculate This First

Let's start with the most practical point: VAT is exempted for small-scale taxpayers with monthly sales of CNY 100,000 (inclusive) or less. For Yiwu business owners who focus on domestic sales and high volume, this policy is almost always applicable—monthly invoicing of several tens of thousands of yuan is common in the International Trade City, and as long as it does not exceed CNY 100,000, no VAT needs to be paid.

The policy basis is the Announcement No. 19 of 2023 of the Ministry of Finance and the State Taxation Administration (财政部 税务总局公告2023年第19号), which is valid until December 31, 2027. This means that from now until the end of 2027, this "exemption amount" is stable, and business owners can operate with confidence according to this rhythm.

Let's do the math: A jewelry stall with monthly sales of CNY 80,000, at a collection rate of 3%, would originally have to pay CNY 2,400 in VAT. Now, it is fully exempted, saving nearly CNY 30,000 per year. This amount is enough to cover more than half a year's rent for the stall.

• Monthly filing: VAT is exempted if monthly sales ≤ CNY 100,000;
• Quarterly filing: VAT is exempted if quarterly sales ≤ CNY 300,000;
• Businesses subject to a 3% collection rate are reduced to 1% (this provision also extends to the end of 2027).

Special reminder: The exemption amount is based on the total sales, not individual transactions. If you issue invoices for CNY 110,000 in a month, even if it exceeds by only CNY 10,000, VAT will be levied for the entire month. Be sure to check your total sales before filing.

Two: 3% Reduced to 1% Collection Rate, Also Applicable to Special Invoices

If your sales exceed the monthly exemption of CNY 100,000, or if customers require a VAT special invoice, don't panic. According to Announcement No. 19 of 2023, small-scale taxpayers with taxable sales subject to a 3% collection rate are reduced to a 1% collection rate for VAT, and this provision also extends to the end of 2027.

In Yiwu, it is common for foreign trade companies and buyers to request special invoices. Previously, a 3% invoice is now issued at 1%, with no change in the customer's deduction, but your tax burden is directly reduced by two-thirds. Business owners in Beixiazhu who deal with e-commerce supply chains often issue special invoices worth hundreds of thousands of yuan per month, and this provision alone can save them several tens of thousands of yuan annually.

Comparison:

Note: For the part where a special invoice is issued, even if the monthly sales do not exceed CNY 100,000, the corresponding tax amount must be paid—because the special invoice is used for downstream deductions, and the state cannot both exempt you and allow the customer to deduct. Therefore, try to issue general invoices for businesses that do not require special invoices, and reserve special invoices for those who truly need them.

Three: 50% Reduction in Six Taxes and Two Fees, the Most Easily Overlooked 'Small Money'

In addition to VAT, there are a number of smaller taxes that can be reduced by 50%: resource tax, urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding securities transaction stamp duty), farmland occupation tax, education surcharge, and local education surcharge. The basis is the Announcement No. 12 of 2023 of the Ministry of Finance and the State Taxation Administration (财政部 税务总局公告2023年第12号), which is valid until the end of 2027.

Yiwu business owners generally own properties and shops, and storage, stalls, and self-built houses for rent, making property tax and urban land use tax unavoidable. Don't underestimate this '50% reduction'; for shop owners in the International Trade City, annual property tax and urban land use tax can easily reach tens of thousands of yuan, and a 50% reduction means saving several thousand yuan.

• Applicable to: small-scale VAT taxpayers, small and micro-profit enterprises, and individual businesses;
• If overpaid, a refund or offset against future taxes can be applied for;
• Additional taxes follow VAT; if VAT is exempted, the additional taxes are also exempted.

Four: Actual Corporate Income Tax Burden of 5%, Individual Business Income Halved

If you are a limited company, pay attention to this: for small and micro-profit enterprises, the portion of annual taxable income not exceeding CNY 3 million is calculated at 25% of the taxable income, and corporate income tax is paid at a rate of 20%—resulting in an actual tax burden of only 5%. This is also based on Announcement No. 12 of 2023, which is valid until the end of 2027.

Small and micro-profit enterprises must meet all three conditions: no more than 300 employees, total assets not exceeding CNY 50 million, and annual taxable income not exceeding CNY 3 million. Most small and medium-sized companies in Yiwu meet these criteria, meaning the income tax rate drops from 25% to 5%. For a company with a profit of CNY 1 million, the income tax changes from CNY 250,000 to CNY 50,000, a significant difference.

If you are an individual business owner, there is another provision: the portion of annual taxable income not exceeding CNY 2 million is halved for personal income tax (Announcement No. 12 of 2023). Many individual business owners in Huangyuan Market and Beixiazhu see a substantial reduction in their actual tax burden after this halving. Keep good records of purchases and maintain proper accounting to fully enjoy the benefits.

Five: Three Key Points to Check Before Enjoying the Benefits

The preferential policies are provided by the state, but whether you can benefit from them depends on the accuracy of your accounting. Here are three common pitfalls for Yiwu business owners, which you should check:

• Check Total Sales Before Filing: The exemption amount is based on the total sales, so WeChat and Alipay receipts must also be recorded and declared, not just the invoiced amounts;
• Compliance of Invoices: Input and output invoices must match, and no false invoices should be issued. Remember to fill in the corresponding sections of the declaration form for tax-exempt items, so you don't miss out on the benefits;
• Timely Filing: Late filing not only affects the enjoyment of benefits but may also result in late fees and fines, and affect your credit rating.

Disorganized accounts and mismatched data are the most common risk points in Yiwu tax audits. It's better to spend a little more time on regular bookkeeping than to rush during the final settlement.

Six: Frequently Asked Questions (Q&A)

Q1: My monthly sales are around CNY 90,000, but my customer wants a special invoice. Can I still be exempted?

Yes. The tax amount corresponding to the special invoice needs to be paid, but if the total of general invoices and un-invoiced income does not exceed CNY 100,000, VAT is still exempted. In short: whether it exceeds CNY 100,000 is determined by the total sales, and the special invoice is taxed separately.

Q2: When do these benefits expire?

The VAT reduction for small-scale taxpayers (CNY 100,000 exemption + 1% collection rate) is valid until December 31, 2027; the 50% reduction in six taxes and two fees, the 5% tax burden for small and micro-profit enterprises, and the 50% reduction in individual business income are also valid until the end of 2027. The policies have strong continuity, but the declaration requirements may be slightly adjusted each year, so refer to the latest announcements.

Q3: Can I enjoy these benefits if I am under the account-based collection method?

Yes. The account-based collection and assessed collection methods are different ways of collection, and the tax benefits for small-scale taxpayers, small and micro-profit enterprises, and individual businesses apply, provided they meet the respective conditions.

Q4: Can I get a refund for overpaid taxes?

Yes. Overpaid taxes due to policy reductions can be refunded or offset against future tax payments during the filing period. For specific procedures, consult your local tax authority or a professional tax and finance institution.

Q5: How do I select the tax rate in the invoicing software?

For those enjoying the 1% collection rate, choose the '1%' collection rate when issuing invoices; for those meeting the exemption conditions, choose the exemption declaration. The collection rate on the invoice and the declaration must be consistent to avoid discrepancies in the declaration comparison.

Seven: Final Thoughts

The policy benefits are clear, but their implementation relies on accurate accounting and timely filing. As the peak business season in the second half of 2026 approaches, take the time now to review your company's tax situation: whether sales have exceeded the threshold, whether any benefits have been missed, and whether the accounts are clear, are all urgent matters.

If you are unsure about the preferential policies or need to streamline your accounting, please contact Jinfan (Yiwu) Finance & Tax Management Co., Ltd.—with a decade of experience in Yiwu, we are familiar with the business models of the International Trade City, Huangyuan Market, and Beixiazhu. From bookkeeping to tax planning, we help you save every penny you are entitled to. Policies are always changing, and it's best to leave the professional work to the professionals.

Source: Announcement No. 12 of 2023 of the Ministry of Finance and the State Taxation Administration (关于进一步实施小微企业"六税两费"减免政策的公告), Announcement No. 19 of 2023 of the Ministry of Finance and the State Taxation Administration (关于增值税小规模纳税人减免增值税政策的公告), and policy documents from the Zhejiang Provincial Tax Service of the State Taxation Administration.