CONTINUED CUTS
China will continue its tax reform with further reductions to benefit the economy
‘Given the government’s measures to deepen the reform of valueadded tax (VAT) launched in May, our company expects to save more than 10 million yuan ($1.47 million) in taxes this year,” said Zhang Dexi, head of Dengkou County branch of dairy giant Mengniu Dairy Co. Ltd., in December 2018.
The company in north China’s Inner Mongolia Autonomous Region is an example of how tax cuts have benefited businesses in the country.
When discussing the Chinese economy in 2018, “tax cuts” will always feature as a notable keyword. From the reduction of VAT rates and personal income tax reform to the tax incentives to support innovation-driven companies, the theme was dominant in all aspects of the economy.
It is expected that 1.3 trillion yuan ($191.7 billion) can be saved across the year, according to Xu Hongcai, Assistant Minister of Finance, at a press conference on January 15. This is higher than the goal of 1.1 trillion yuan ($162.2 billion) stated at the outset of 2018.
In Beijing alone, 40 billion yuan ($5.9 billion) was saved, according to a press release from the Beijing Municipal Bureau of Finance on January 7.
Room to continue
As China’s GDP growth stood at 6.4 percent in the fourth quarter of 2018, the lowest since 2009, cutting taxes is a priority for macro-control measures. According to a report from Securities Daily, throughout 2018, cutting taxes and administrative fees was discussed at least 27 times at State Council executive meetings. At the second State Council executive meeting of 2019 held on January 9, a number of inclusive tax-cut measures were announced to benefit small businesses, a sign that the trend is set to continue throughout 2019.
“As the Chinese economy shifts to