Oct. 26 – Following the Chinese State Council’s call for providing more financial support to cash-strapped small enterprises under the country’s tightening monetary environment, the State Administration of Taxation and Ministry of Finance recently co-issued a new circular that will grant favorable tax treatment to financial institutions when they offer loans to small enterprises.
The “Circular on Stamp Duty Exemption on Lending Contracts between Financial Institutions and Micro and Small Sized Enterprises (MSEs) (caishui  No.105),” released on October 17, stipulated that the loan contracts signed between financial institutions and MSEs will be exempt from stamp duties during the period between November 1, 2011 and October 31, 2014.
The Circular also clarified that the identification of aforesaid MSEs shall follow the standards listed in the “Circular on Standards for Small and Medium Sized Enterprises (SMEs) Classification (gongxinbulianqiye  No.300),” which was co-issued by the Ministry of Industry and Information Technology, the National Bureau of Statistics, the National Development and Reform Commission, and the Ministry of Finance in June this year.
Circular No.300, which classifies SMEs as either “micro,” “small,” or “medium,” defined “micro” and “small” sized enterprises across different sectors as follows:
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