Fur­ther tax cuts planned to ben­e­fit broader groups

China Daily - - BUSINESS - By CHEN JIA chen­jia@chi­nadaily.com.cn

China’s tax au­thor­ity said on Fri­day it is putting for­ward a more ag­gres­sive tax re­duc­tion plan, fo­cus­ing on value-added tax and in­di­vid­ual in­come tax re­form, to sta­bi­lize pri­vate en­ter­prises’ in­vest­ment and fuel con­sump­tion.

“We will pro­pose a larg­er­scale tax cut and fees re­duc­tion pol­icy as soon as pos­si­ble,” said Wang Jun, di­rec­tor of the State Tax­a­tion Ad­min­is­tra­tion, in an in­ter­view with China Daily on Fri­day.

The plan should be straight­for­ward to im­ple­ment, and would ben­e­fit a broader group of in­di­vid­u­als and busi­nesses, he said. Once in­tro­duced, the pol­icy would fur­ther cut cor­po­ra­tions’ tax bill, es­pe­cially for tech star­tups, and small and mi­croen­ter­prises, he added.

“In the mean­time, we will work with other gov­ern­ment de­part­ments to im­prove the spe­cific in­di­vid­ual in­come re­duc­tion plan af­ter seek­ing pub­lic opin­ion,” Wang said.

With the ef­fects of the tax cuts pre­dicted to set in dur­ing the re­main­ing two months of the year, the to­tal tax re­duc­tion amount is fore­cast to ex­ceed 1.3 tril­lion yuan ($187 bil­lion). This is ex­pected to lead to a con­tin­ued slow­down of tax in­come growth to a rate sim­i­lar to an­nual GDP growth, he said.

Ex­perts fore­cast that such proac­tive fis­cal pol­icy will con­tinue next year, as down­ward eco­nomic pres­sure on the world’s sec­ond-largest econ­omy could rise. They added over­all tax cuts in 2019 would be no lower than this year’s.

Bai Jing­ming, vice-pres­i­dent of the Chi­nese Academy of Fis­cal Sciences, said the next step for value-added tax (VAT) re­form is clear — to fur­ther re­duce VAT brack­ets from three to two.

“It will be in­tro­duced in the very near fu­ture,” Bai said.

He pre­dicted the up­com­ing tax cut ef­fects from this mea­sure could be even stronger than the re­sults achieved so far this year.

“The tax­a­tion ad­min­is­tra­tion also plans to elicit sug­ges­tions on low­er­ing cor­po­ra­tions’ so­cial se­cu­rity premium rate, to en­sure a real cut to their op­er­at­ing costs,” Wang said.

For pri­vate com­pa­nies fac­ing fi­nanc­ing dif­fi­cul­ties, fur­ther tax poli­cies could be in­tro­duced to ease their bur­den, and some tax pay­ments could be de­layed.

In terms of sup­port­ing fi­nan­cial in­sti­tu­tions’ lend­ing to small and mi­croen­ter­prises, taxes on fi­nan­cial in­sti­tu­tions’ in­ter­est in­come and fi­nanc­ing guar­an­tee in­come will be waived, he added.

Ac­cord­ing to Wang, ben­e­fi­cial poli­cies re­sulted in a to­tal tax cut of 143.7 bil­lion yuan for small and mi­croen­ter­prises in the first three quar­ters of this year, up 41.3 per­cent year-on-year. For 732 large-sized pri­vate com­pa­nies, un­der the SAT statis­tics sys­tem, tax cuts reached 71.4 bil­lion yuan, up by 19.3 per­cent year-on-year.

Through the VAT re­form, about 238.6 bil­lion yuan in taxes had been re­duced by the end of Septem­ber, ac­cord­ing to data re­leased by the ad­min­is­tra­tion.

In­flu­enced by the tax cut poli­cies, the coun­try’s fis­cal rev­enue growth is likely to slow fur­ther in the fourth quar­ter and next year, ac­cord­ing to Wen Zongyu, di­rec­tor of the State-owned Re­search In­sti­tute for Fis­cal Science of the Fi­nance Min­istry.

Wang Jun,di­rec­tor of China’s State Ad­min­is­tra­tion of Tax­a­tion

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