Services, manufacturing sectors hail policy support
Tax cuts and refunds announced by Premier Li will aid post-pandemic recovery, firms say
As the Chinese central government vowed to put in place more measures to ensure economic stability, enterprises from the services and manufacturing sectors expect a further rebound this year.
In the Government Work Report delivered at the opening of the fifth session of the 13th National People’s Congress on March 5, Premier Li Keqiang announced a new package of tax refunds and cuts totaling 2.5 trillion yuan ($395.37 billion) this year.
Li noted that sectors such as catering, accommodation, retail, tourism and passenger transport provide a large number of job opportunities but are highly vulnerable to the effects of COVID-19.
The report said such sectors should be given more priority in terms of policies to help enterprises survive and thrive.
Huang Baosuo, chairman of Hefei, Anhui province-based Enjoy Sun International Holding Group, said the promise for support is an injection of confidence into his business.
Holding multiple catering and accommodation brands, the company experienced critical moments at the beginning of the pandemic, Huang said.
“With more than 4,000 employees, the company’s over 100 outlets and shops together saw a loss of 150 million yuan in the first two months of the COVID-19 outbreak,” he said.
With support of the local government, all of the outlets were exempted from part of the rent for at least two months and all the value-added tax for the whole of 2020.
Property owners offering rent reductions to tenants enjoyed tax cuts and will keep receiving government support if they continue to do so.
The National Development and Reform Commission, together with a number of other government departments, issued a policy document on Feb 18 to promote the recovery and development of services industries in difficulty.
The document ruled that property owners who reduce or exempt rents for tenants from the services sector will enjoy reductions in property and urban land use taxes.
The value-added tax rate of Enjoy Sun was lowered from 3 percent on normal days to 1 percent in 2021 during COVID-19. In addition, the company also benefited from other taxand-fee reduction policies and easier access to bank loans.
“Now we have more cash reserves to not only maintain our business but also expand, as we opened more than 10 new outlets last year,” said Huang. As the business expands, he said the shortage of workers will continue to be a problem facing the traditional services sector.
Yan Qi, a member of the 13th National Committee of the Chinese People’s Political Consultative Conference and chairwoman of Chongqing Taoranju Catering Culture (Group) Co Ltd, said her company has been increasingly applying robots to replace human workers.
Taoranju founded a technology subsidiary in 2021 to focus on developing more catering robots, and now it owns more than 50 patents. The investment in research and development helped the company save 760,000 yuan in taxes.
The policy document issued on Feb 18 encouraged services enterprises to purchase more equipment. This year, micro, small and medium-sized enterprises, or MSMEs, which purchase new equipment worth more than 5 million yuan with a three-year depreciation period are entitled to a one-off deduction of total purchase costs from taxable income.
Those with equipment depreciation periods of four, five or 10 years are eligible for a 50 percent deduction. Some local governments also decided to subsidize catering robots. Lu’an, a prefecture-level city in Anhui province, has a specific policy that 10 percent of the selling price for each cooking robot used by catering enterprises will be covered by the local government before the end of 2023.