$73b tar­geted for VAT re­lief in 2016

China Daily (Canada) - - TOP NEWS - By ZHANG YUE and XIN ZHIMING in Bei­jing and YU RAN in Shang­hai

The goal for China’s on­go­ing na­tion­wide val­ueadded tax re­form is to re­duce the tax bur­den for en­ter­prises by 500 bil­lion yuan ($73 bil­lion) by the end of this year.

Theamount­wasan­nounced on Tues­day at a State Coun­cil ex­ec­u­tive meet­ing presided over by Pre­mier Li Ke­qiang, who heard a re­port on the pro­gres­soft­heVAT­ex­pan­sion.

The VAT re­form, which is de­signed to re­duce the tax bur­den for ser­vice in­dus­tries and boost in­dus­trial up­grad­ing and in­no­va­tion, has ex­tended China’s val­ueadded tax since May to the con­struc­tion, real es­tate, fi­nance and con­sumer ser­vices sec­tors

VAT re­form is play­ing a cru­cial role in China’s ef­fort to en­sure steady eco­nomic growth and struc­tural ad­just­ment, Li said.

Min­istry of Fi­nance fig­ures show that be­tweenMay andOc­to­ber, taxes con­tin­ued drop­ping in the newly added sec­tors. Dur­ing the past six months, the new­tax plan has helped en­ter­prises in those sec­tors to save a to­tal of 96.5 bil­lion yuan in taxes.

The tax bur­den has been re­duced or lev­eled off for 98.5 per­cent of busi­ness own­ers, the fig­ures show.

“Our goal through VAT re­form is to bet­ter in­vig­o­rate the mar­ket and boost the mod­ern ser­vice in­dus­try,” Li said. “The steady progress of tax cuts re­duces the bur­den for en­ter­prises and will help cre­ate enor­mous em­ploy­ment op­por­tu­ni­ties.”

The pre­mier has placed great em­pha­sis on the progress of the re­form, re­quir­ing departments to de­velop tai­lored poli­cies for var­i­ous sec­tors to boost in­no­va­tion and in­dus­trial up­grad­ing.

In the past six months, 530,000 tax­pay­ers in the con­struc­tion, real es­tate, fi­nance and con­sumer ser­vice in­dus­tries have ben­e­fited from the re­form,

Our goal ... is to bet­ter in­vig­o­rate the mar­ket and boost the mod­ern ser­vice in­dus­try.”

ac­cord­ing to the min­istry.

Prob­lems re­main, how­ever. Sec­tors such as fi­nance, tech­nol­ogy and tourism might need tai­lored tax as­sess­ment mea­sures. Ad­di­tion­ally, some com­pa­nies have not­made­full use of the newVAT plan.

Tax as­sess­ment mea­sures will be fur­ther tai­lored in the fi­nance and con­struc­tion sec­tor, as well as for tech­no­log­i­cal trans­fers.

The govern­ment will also pro­vide guid­ance to busi­ness own­ers on how to un­der­stand and best use the new tax pol­icy so they can ease their tax bur­den. The govern­ment will also im­prove tax col­lec­tion­meth­ods.

“Re­duc­ing taxes will not only ben­e­fit en­ter­prises, but will also bring greater goods for the coun­try in the long run,” Li said. “This is part of our pos­i­tive fis­cal pol­icy, in­stead of giv­ing pol­icy sup­port to par­tic­u­lar in­dus­tries and re­turn­ing to the planned economy.”

The meet­ing also de­cided onTues­day that dis­tri­bu­tion of VAT rev­enues will be bal­anced be­tween­the coun­try’s eastern re­gions and cen­tral and western re­gions.

Benny Li, CEO and pres­i­dent ofHuaxia Fi­nance Eq­uity In­vest­ment Man­age­ment Co, said, “The full in­tro­duc­tion of VAT al­lows us to plan ahead and man­age our ac­count­ing risk, which has a di­rect im­pact on our prof­itabil­ity and sus­tain­abil­ity.”

Con­tact the writ­ers at zhangyue@ chi­nadaily.com.cn

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