Tax break thresh­old rises again

More small, mi­cro com­pa­nies to ben­e­fit through end of 2017 in in­no­va­tion drive

China Daily (Canada) - - CHINA - By ZHAO YI­NAN zhaoy­i­nan@chi­nadaily.com.cn

More small and mi­cro busi­nesses will be el­i­gi­ble for tax breaks asChina strives to en­cour­age in­no­va­tion and boost em­ploy­ment in the face of down­ward eco­nomic pres­sure, the State Coun­cil de­cided onWed­nes­day.

An ex­ec­u­tive meet­ing of the coun­cil, presided over by Premier Li Ke­qiang, de­cided that busi­nesses with an­nual tax­able in­come be­low 300,000 yuan ($46,900) will be el­i­gi­ble for a 50 per­cent re­duc­tion in busi­ness in­come tax.

The pol­icy will be ef­fec­tive through the end of 2017. El­i­gi­ble com­pa­nies will pay a 20 per­cent tax rate, five per­cent­age points lower than peer busi­nesses.

It is the sec­ond time this year that the State Coun­cil, China’s Cab­i­net, has raised the in­come thresh­old for busi­nesses to qual­ify for the tax re­duc­tion. In Fe­bru­ary, the gov­ern­ment raised the thresh­old for smal­land­mi­cro com­pa­nies from 100,000 yuan to 200,000 yuan.

In ad­di­tion, the State Coun­cil de­cided onWed­nes­day to ex­tend through 2017 the ex­emp­tion of the val­ueadded tax and sales tax for small busi­nesses and in­di­vid­u­ally owned busi­nesses with less than 30,000 yuan in monthly sales. The ex­emp­tion had been set to ex­pire at the end of the year.

Tax breaks for small and mi­cro busi­nesses in China to­taled 61.2 bil­lion yuan last year, ac­cord­ing to the State Ad­min­is­tra­tion of Tax­a­tion, the coun­try’s top tax­a­tion au­thor­ity. At least 10 bil­lion yuan of busi­ness in­come tax has been re­duced, and more than 2.46 mil­lion busi­nesses have ben­e­fited, the ad­min­is­tra­tion said.

Wang Yuanzhi, deputy sec­re­tary-gen­eral of the China As­so­ci­a­tion of Small and Medium En­ter­prises, said small and mi­cro busi­nesses — mostly pri­vate com­pa­nies — are good job cre­ators.

“A healthy de­vel­op­ment of small busi­nesses con­trib­utes greatly to the vi­tal­ity of the mar­ket and helps the na­tional econ­omy to counter the down­ward pres­sure” he said.

Eco­nomic in­di­ca­tors in July fell short of mar­ket ex­pec­ta­tions, show­ing that the Chi­nese econ­omy still lacks mo­men­tum.

The coun­try’s value-added in­dus­trial out­put, which mea­sures the fi­nal value of in­dus­trial pro­duc­tion, ex­panded by 6 per­cent yearon-year in July, down from 6.8 per­cent in June.

Fixed-as­set in­vest­ment, a ma­jor driver of growth, also wit­nessed slightly slower ex­pan­sion, with no sign of im­prove­ment for in­vest­ment in prop­erty and in­fra­struc­ture. Re­tail sales held steady in July, with the growth rate just 0.1 of a per­cent­age point lower than a month ago.

Wed­nes­day’s meet­ing also de­cided to take pro-growth mea­sures, in­clud­ing the de­vel­op­ment of the lo­gis­tics in­dus­try and big data in­dus­try, as part of the gov­ern­ment’s ef­forts to prop up the econ­omy.

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