Sole proprietorship or company in China: tax comparison
Taxes and contributions for a sole proprietor under each available system and for your own company, for a resident of the chosen country with the same profit.
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Individual business (getihu)
Sole proprietor个体工商户（查账征收）
Profit minus CNY 60,000 is taxed as business income at 5–35%. Until 31 Dec 2027 the tax on the part up to CNY 2 million is halved.
Conditions
Registration with the market regulation authority; no revenue limit. VAT: small-scale taxpayer with sales up to CNY 5 million a year; VAT and surcharges are not included.
Calculated for actual-books assessment (查账征收). The tax office may impose deemed assessment (核定征收), giving a different amount.
An enterprise without legal personality: profit minus CNY 60,000 is taxed as the owner's business income at 5–35%. The halving relief for getihu does not apply.
Conditions
The owner is liable for debts with all personal assets. No revenue limit; VAT as for getihu (not included).
Corporate income tax 25%; a small low-profit enterprise with taxable income up to CNY 3 million pays effectively 5% (until 31 Dec 2027). Dividends to the owner: 20%.
Conditions
Small low-profit relief: taxable income up to CNY 3 million, up to 300 staff, assets up to CNY 50 million, not a restricted industry. Above CNY 3 million, 25% applies to all of it.
The company is liable for VAT (not included). An owner without salary is not covered by compulsory social insurance.
Business activity: IT and consulting services for business clients
One owner, tax resident of China, no employees, no other income, no children, full year 2026.
No social insurance: for getihu and sole proprietorship enterprises it is voluntary (flexible-employment scheme); a company owner without salary is not covered. Special additional deductions (housing rent etc.) are not applied.
For the company: the owner takes no salary; profit after tax is either paid out in full as dividends or kept in the company.
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