China will continue to cut taxes and fees this year as part of the ongoing efforts to save costs for enterprises, the nation’s top economic regulator said.
Nineteen targeted measures have been announced to reduce corporate costs, support the real economy and boost the vitality of the market this year, said a document released by the National Development and Reform Commission and three other ministries on Monday.
The measures include further optimizing taxes and fee cuts, bringing down government-imposed transaction costs, cutting labor costs for enterprises, canceling or lowering some highway and civil aviation charges and improving transport and logistics infrastructure.
Wu Xiaohua, vice-president of the Academy of Macroeconomic Research of the NDRC, said the new document is in line with key tasks mapped out in the Government Work Report this year, marking efforts to deepen supply-side structural reforms, stimulate market vitality and promote high-quality economic growth.
“The Chinese economy is now evolving into a more advanced growth mode, a more complex division of labor and a more reasonable structure, and boosting the real economy will be key to accelerating the economic transformation,” Wu said. “The reduction of corporate costs will ensure steady and healthy development of the economy.”
Citing the new document, Wu said the government will continue to optimize tax and fee cuts, reduce financing, labor, energy, land costs and implement other measures necessary to create a better business environment.
According to the document, the country will extend the duration of value-added tax relief measures for small-scale taxpayers and increase their monthly sales tax threshold from 100,000 yuan ($15,560) to 150,000 yuan.
In addition to the preferential policies already in force, China will halve the income tax for micro and small enterprises and self-employed individuals with annual taxable income of below 1 million yuan.
In terms of supporting advanced manufacturing enterprises, the country will continue to implement the policy of granting an extra tax deduction of 75 percent for the research and development costs of enterprises, and raise the same to 100 percent for manufacturing enterprises.
Wang Peng, distinguished research fellow of the Center for Hong Kong, Macao, Taiwan and World Affairs of the Communication University of China, said the government’s new measures are part of the efforts to foster steady economic growth this year.
“While China has successfully prevented and controlled the COVID-19 epidemic and registered impressive economic growth, the globally-spreading pandemic has tipped the world economy into recession,” said Wang.
“The new measures mark the government’s latest move to deal with the novel coronavirus epidemic impact. It will also lighten the burden for enterprises and help increase their global competitiveness.”
Citing this year’s Government Work Report, Tao Jin, deputy director of the macroeconomic research center of the Suning Institute of Finance, said the government has ramped up the efforts to enhance the quality, efficiency and sustainability of its proactive fiscal policy, increasing support for efforts to ensure employment, living standards and the operation of market entities.
By the end of April, the 4,285 Chinese companies listed on the A-share market said taxes and fees paid in the first quarter accounted for 6.86 percent of their operating revenue, 0.99 percentage point lower than the figure during the same period a year ago, according to Tao.
To better implement the supportive policies, Tao said more efforts are needed to strengthen oversight over local governments and increase support for catering, hotels, services as well as micro and small businesses.