At the executive meeting of the State Council on March 31, Premier Li Keqiang pressed for consistency in policy adjustments.
“When adjusting interim policies, hedging measures must be adopted to energize market entities and stabilize the foundation of economic recovery,” said Premier Li.
Decisions were made to cut taxes for small and micro-sized enterprises, the self-employed, and advanced manufacturing businesses.
“China’s current inclusive preferential tax policies can benefit large quantities of small and micro-sized enterprises, the self-employed, and advanced manufacturing businesses. It is fair and effective, and shows flexibility of policy adjustment,” the Premier said.
Over 550-billion-yuan new tax cuts estimated
Small and micro-sized enterprises and the self-employed, Premier Li noted, are the major creators of jobs and the driving source of economic development. Supporting them can effectively enlarge employment at a time when China’s economy is still at a crucial juncture and requires more stabilizing efforts.
At the executive meeting on March 24, decisions were made to further raise the ratio of extra tax deductions on manufacturing firms’ R&D costs. The executive meeting on March 31 decided that manufacturers of transporting equipment, electrical machinery, instruments and apparatus, medicine, chemical fibers, and others can enjoy a preferential tax policy in excess VAT paid as advanced manufacturing businesses.
Tax breaks will be extended for small and micro-sized enterprises and also benefit the self-employed. From Jan 1, 2021 to the end of 2022, tax levied on their taxable income under 1 million yuan will be halved while all current preferential tax policies will stay in effect.
The VAT threshold will be lifted from current monthly sales of 100,000 yuan to 150,000 yuan for small-scale taxpayers from April 1, 2021 to the end of 2022.
From April 1, 2021, manufacturers of transporting equipment, electrical machinery, instruments and apparatus, medicine, chemical fibers, and others will enjoy a preferential tax policy in excess VAT paid as advanced manufacturing businesses. The excess VAT paid will be refunded in full each month. New tax cuts are estimated to be over 550 billion yuan.
Arbitrary charges deterred
Even while cutting taxes, the government should reasonably reduce nontax revenue. Any arbitrary charge should be deterred to ease enterprises’ burden, the Premier said.
“Preferential tax policies should be carried out effectively, while arbitrary charges should be resolutely stopped,” said Premier Li.
“Fair and inclusive policies and reforms should be encouraged to further benefit market entities and spur their vitality. Local authorities should be guided to make good use of fiscal revenue’s recovery growth to reasonably reduce the governmental leverage ratio,” the Premier said.
He also stressed that new projects should not be launched blindly, and fiscal sustainability should be enhanced.
