Company taxes, fees are to be trimmed

China will help enterprises reduce their tax burden and cut fees to help improve their competitiveness, Premier Li Keqiang pledged on Wednesday.

The costs of broadband access, electricity and logistics will be further reduced, with the total cuts in costs and taxes expected to reach 1 trillion yuan ($144.7 billion) this year, Li said at a news conference at the end of this year’s two sessions.

Cost reductions for enterprises mean the government needs to “tighten its belt”, he said.

“The central government is required to take the lead in reducing government expenses in order to leave room for cutting costs for enterprises,” Li said.

He added that China will not reduce imports or retreat from the openingup process to support domestic enterprises.

Li’s comments were in response to complaints of high tax burdens in the private sector.

Policies ... will let the market players feel the real benefits.” Zhang Lianqi, a member of the 12th CPPCC National Committee

Ding Mingshan, CEO of China Wallink Holding Group, had anticipated the government lowering taxes of all types on enterprises, given that companies are likely to be more sensitive to costs when encountering economic pressures. Ding also is a member of the National Committee of the Chinese People’s Political Consultative Conference.

Zhang Lianqi, also a member of the advisory body, said that while such complaints by companies make sense, the government also needs to strike a balance between lowering costs for market players and ensuring basic and necessary fiscal spending.

Zhang said policies lowering taxes and fees are expected to be rolled out this year to mesh with the nation’s need to support the economy’s stabilizing trend.

“Policies in the Government Work Report delivered by Premier Li this month will facilitate the speed of improving the current tax system and let the market players feel the real benefits,” said Zhang.

China will consolidate four tax rates into three, according to the report. The government also will cancel 35 administrative fees paid by enterprises, according to the report.

There are about 500 administrative fees that enterprises in China may be subject to, according to a report released by the Research Institute for Fiscal Science last year.

Efforts such as simplifying the tax regime will help improve the efficiency of the tax system and reduce problems encountered while collecting taxes, said Jia Kang, director of the China Academy of New Supply-side Economics.