Small businesses get big tax, fee cuts to spur growth

Micro-sized and small businesses in China got new tax and fee cuts earlier this month, and the country is planning to expand preferential policies to a wider range of companies to further ease the burden on manufacturers and support the development of the real economy.

China is giving emphasis to tax cuts and fee reductions to support small businesses, as the country grapples with persistent downward pressure on economic growth.

Businesses with less than 100,000 yuan ($14,761) in monthly sales can obtain value-added tax (VAT) exemptions, according to new general tax and fee reduction policies on for micro-sized and small businesses.

The reductions don’t stop with VAT and income taxes. China has also encouraged local governments to offer cut of up to 50 percent on several other categories of taxes. As of Thursday, 29 provinces, prefectures and cities had responded to the call.

Analysts noted China’s tax cuts will inject fresh impetus to the real economy by boosting small businesses. The cuts will also help move the economy off its old track of infrastructure investment-related stimulus, as well as maintain steady growth.

Small and micro-sized firms are the main forces of development and employment, and an important source of innovation. It’s significant to reduce their costs and encourage innovation to enhance the growth momentum as the economy is facing downward challenges, analysts said.

According to the Notice on Implementing the Policy of Inclusive Tax Relief for Small and Micro Enterprises, released by the Ministry of Finance on January 17, China will expand existing preferential policies for small and low-profit enterprises to a wider range of companies.