BEIJING - A small business in China only needs to pay half of income tax if the amount of its due tax is 30,000 yuan ($4,550) or lower annually, according to a policy announced Tuesday.

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Additionally, the income tax rate will be set at 20 percent for these businesses, compared with 25 percent for other firms, the Ministry of Finance said in a statement on its website.

The policy, which was implemented last year, is designed to ease the burden on small firms following the global economic downturn and partially to alleviate these firms' financing difficulties.

The State Council, China's Cabinet, has approved that the tax plan would be continued this year, the ministry said.

China started offering the preferential tax status to these small firms in January 1 last year.