The measure is effective from Jan 1 of this year, to the end of 2017. During the same period, these companies will also pay tax at a rate of 20 percent, five points lower than other enterprises.

　　The new policy will benefit 2.5 million businesses across the country.

　　Vice finance minister Shi Yaobin says the government has additional support policies for the sector.

　　中国支持小企业刺激经济增长

　　"We have earmarked a special fund to support small and micro enterprises. Last year 11.6 billion yuan was allocated to support those enterprises. This year we will still allocate the same amount of money despite the slowing growth rate for the national budget. Moreover, we are considering to set up another special fund and issue more favorable policies to further shore up the sector."

　　Official figures show small and micro businesses in China had over 10 billion yuan in business income taxes reduced or scrapped last year.

　　Shi Yaobin adds that the development of the sector is crucial for China's overall economic development.

　　"We aim to enhance the small and micro companies' capacity of taking risks by reducing their tax burden. We also want to encourage the public to start a business by giving direct financial support to the sector."

　　Analysts say the favorable policies aim to help the sector cope with the slowdown of the Chinese economy, after the growth rate sank to a 24 year low last year.

　　The policies are expected to boost economic growth and employment as nearly 80 percent of urban jobs are provided by small companies.

　　For CRI, I'm Yin Xiuqi.