Reduce heavy burden of fees on enterprises

ZONG QINGHOU, founder of China’s largest beverage company, Hangzhou Wahaha Group in East China’s Zhejiang province, said in an interview a month ago that his company paid over 40 million yuan ($5.8 million) in mandatory fees between January and November last year. Beijing News commented on Friday:

In response to Zong’s complaint about the more than 500 different fees his company has to pay, the Ministry of Finance and the National Development and Reform Commission on Wednesday provided documented evidence that the Hangzhou Wahaha Group paid 212 different fees totaling 74 million yuan in 2015.

The fees may not seem like a big deal in comparison to Wahaha’s 49.4 billion yuan profits that year. But let us not forget: Many could be justifiably avoided in the long-term interest of the company. And the exemption of unnecessary charges could make a life-or-death difference for small companies struggling to keep afloat.

Although Zong’s argument contradicts the official conclusion in specific numbers, some 200 kinds of mandatory fees are not something he and many other entrepreneurs can make light of on their balance sheet. Aside from the considerable cost, Chinese companies may have to spend much of their time calculating and paying these fees.

A decent taxpayer, enterprises included, normally expects promised public services, most of which should be free, from the local government. However, some companies are at times offered compromised services after paying all their taxes and fees as required.

Cutting the various fees would be a key step in relieving the financial burden on Chinese enterprises. In the West governments are already doing so to attract investments. Newly installed US President Donald Trump had promised enterprises a 20 percent tax cut from 35 percent to 15 percent and is very likely to make it happen. The United Kingdom, too, is inclined to lower the corporate income tax from 20 percent to 17 percent even 15 percent. That does not bode well for Chinese companies aiming to stay competitive in the global market if they are burdened by heavy taxes.