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Excerpts from State Council policy briefing on June 9

Updated: Jun 9,2017 6:52 PM

The State Council policy briefing on June 9 focused on cutting non-tax administrative fees for enterprises, with Deputy Minister of Finance Shi Yaobin and Li Rusheng, a senior official from the Ministry of Housing and Urban-Rural Development speaking.

Shi said a decision was made at the State Council executive meeting on June 7 to cut another 283 billion yuan ($41.7 billion) in taxes and fees, which — with previous policy moves that resulted in 718 billion yuan in deductions — will achieve the goal of saving corporations 1 trillion yuan this year.

The government will reduce the assurance deposit that construction companies have to pay before signing contracts, cut some non-tax fees and government funds in the energy sector, and temporarily cancel supervision fees in the banking and insurance industries.

A clear list of administrative fees — including their name, charger and law basis — is being compiled by the government, in order to enhance transparency and be subject to public oversight, Shi said.

Fees charged by public institutions will also be listed. “Some public institutions have made use of their monopoly status and public resources to charge compulsory service fees. It adds to corporate burdens and should be regulated strictly.”

To secure a budget balance after tax and fee cuts, the government has expanded its projected deficit this year. And the central government will help lend some money to local governments if they face severe financial problems, Shi added.

The State Council executive meeting on June 7 decided to reduce the upper limit of construction assurance deposits from 5 percent to 3 percent. The deposit is a kind of fund used to repair any construction defects within a year or two after completion.

Because much of the deposits had not been used for repairs in the past, the reduction in assurance deposits will not affect the fulfillment of repair obligations, but will help enterprises increase working capital and invest more in equipment and workforce, according to Li.

The construction assurance deposit makes up about 3.2 percent of revenue in the construction sector. Last year, the revenue reached around 17 trillion yuan, among which the deposit was 540 billion yuan. The reduction in the upper limit of assurance deposits is expected to save construction enterprises almost 210 billion yuan each year, Li said.

Next, the Ministry of Housing and Urban-Rural Development, working with the Ministry of Finance, will revise the regulations on the construction assurance deposit, and roll out other measures such as bank guarantees, and engineering guarantee and insurance system, in order to further ease enterprises’ burdens, Li said.