Boost to real economy, entrepreneurship

The new taxJ cuts for small and medium-sized enterprises in the technology fields will boost the real economy and promote entrepreneurship and innovation, experts said.

“The precise guidance on higher deductions will drive technology innovation as these tech SMEs now have insufficient input for R&D. We need to encourage innovation through preferential tax policies,” said Zhang Lianqi, member of the 12th National Committee of the China’s top political advisory body and partner of Ruihua Certified Public Accountants. “The tax cuts will increase cash flow of tech SMEs.”

Zhang said companies benefiting from the tax cuts may make more efforts toward expanding production capacity and making investments, including purchasing more advanced equipment, developing intellectual properties, increasing R&D input and enhancing employees’ salaries.

Jiang Zhen, associate researcher at the Financial Strategy Institute, said tech SMEs are the driving force of innovation and engine for future economic growth. He agreed with Zhang that the new tax policy will relieve financial burden on tech SMEs, letting them increase investments.

Liu Jianwen, a professor at the law school of Peking University, said until recently, the tax burden on companies was relatively heavy, and the new measures will benefit SMEs.