The General Office of Changsha Municipal People's Government has recently issued the "Several Measures of Changsha City to Support the Transformation and Upgrading of Individual Businesses into Enterprises" (hereinafter referred to as "Several Measures") to enhance market competitiveness and vitality, and promote the high-quality development of market entities. It will further encourage the transformation and upgrading of individual businesses from 10 aspects.

Classified guidance

The "transformation and upgrading of individual businesses into enterprises" refers to the transformation and upgrading of individual businesses into limited companies, sole proprietorship enterprises and partnership enterprises.

According to the relevant person in charge of Changsha Market Supervision Bureau, in terms of market entities, the transformation and upgrading of individual businesses into enterprises can help reduce business risks, obtain bank loans, attract investment to expand the market, participate in project bidding, enter e-commerce platforms and carry out brand management, so as to improve the competitiveness and risk resistance capacity.

As for the whole city, it is of great significance in optimizing the main structure and continuously stimulating the market vitality.

Since this year, Changsha City has taken the promotion of the transformation and upgrading of individual businesses into enterprises as one of the important tasks to vigorously implement the market entity cultivation project.

As of the end of August this year, among the 1.503 million market entities in Changsha, there were 559,000 enterprise entities, of which 83,000 were newly established enterprises, with a year-on-year growth of 20.4%. There were 579 enterprises upgraded through the transformation and upgrading of individual businesses into enterprises.

It is an important link of further optimizing the economic development structure of Changsha to actively guide the qualified individual businesses to establish modern enterprise system.

The "Several Measures" was issued by relevant departments in Changsha to establish a collaborative working mechanism and preferential policy system, stimulate the willingness of more individual businesses for upgrading and jointly assist individual businesses in their barrier-free transformation and upgrading.

Given that there are nearly 900,000 individual businesses, it is necessary to clarify the categories. Based on the principles of government guidance, voluntary subject and classified guidance, three types of objects are clarified as the focus of support, namely, those stipulated by laws and regulations, those with the standard scale and those with the intention of transformation.

The "Several Measures" states that those that should be registered as enterprises according to laws, regulations or industry regulations shall be urged to transform; those registered as general taxpayers shall be supported to transform; those whose business premises area reaches 500 square meters or those with more than 20 employees shall be guided to transform; those with great development potential and willingness to transform shall be focused on supporting.

Optimization of the registration and approval process

In the process of transformation and upgrading of individual businesses into enterprises, it is essential to cancel the original business license and go through the new registration and approval procedures. The reporter learned that some individual businesses are worried about the troublesome transformation procedures, and others are worried that the cost will increase.

In this regard, the "Several Measures" gives full consideration to facilitating registration permits and optimizing approval procedures.

For example, cancellation and establishment registration can be handled at the same time. If tax-related matters are not handled, there is no need to apply for a tax clearance certificate at the tax department.

Some self-employed people are worried that they will have to change the name after transforming to an enterprise. The new support measures are to relax the name registration, and to retain the original business name and industry characteristics to the maximum extent without violating the regulations.

There are two kinds of optimization in terms of license approval. In one case, those that are engaged in food production, food business, medical device business, and drug business and apply for transformation in the same business scope and place, can be exempted from on-site verification with relevant procedures. The license can be obtained within one working day.

In the other case, the transformation enterprises applying for the production license of industrial products shall implement the approval mode of "certification before verification". They are exempted from product certification inspection.

Preferential support policies

The "Several Measures" also highlights the policy support in terms of capital, taxation and finance to help more individual businesses gradually incubate into micro, small, medium-sized enterprises and achieve sustainable development through a full range of preferential support. 

As for fee reduction and tax reduction, eligible enterprises in transformation will be exempted from the enterprise income tax, deed tax, real estate registration fee and social security fee in accordance with relevant policies, so as to provide strong support and guarantee for the enterprises.

In terms of financial support, Changsha City will also take out real money to support the transformation and upgrading of individual businesses into enterprises in addition to supporting technological transformation funds, special enterprise funds and expanding financial channels.

​​​​​​​For individual businesses established before December 31, 2021, which are transformed and upgraded to enterprises after January 1, 2022, they shall declare and pay taxes on time for three consecutive months from the date of transformation and registration. 

Moreover, for enterprises in the transformation whose taxes are deposited in the bank, the municipal finance will give a one-time reward of no more than 10,000 yuan, and the awards presented by the park or district where the enterprise is located will not exceed 10,000 yuan.