Enterprises across the country could save over 100 billion yuan ($15.48 billion) each year with the new tax cut policies released by the State Council.
A meeting presided over by Premier Li Keqiang on April 13 decided to reduce the burden on individuals and enterprises by cutting their payment to social security funds.
It said enterprises that contribute more than 20 percent of the pension insurance payment can reduce their rate to 20 percent, while those in provinces that have sufficient funds can lower the rate to 19 percent.
In addition, the rate of unemployment insurance will range between 1 percent and 1.5 percent, down from the current 2 percent, and that of housing provident funds should stay below 12 percent.
It also said that some enterprises can apply to temporarily lower their rate of housing provident funds or delay the payments.
Industry insiders believe that these new measures show the government’s resolve to reduce the burden on enterprises, and it is also key to this year’s structural reform.
Social security funds contribute a big part to enterprises’ costs, and reducing the funds will help them out of difficulties and better use the funds, according to Ni Pengfei, head of the Center for City and Competitiveness of the Chinese Academy of Social Sciences.
Although the reduction is small, the significance is big, which means that the rate of the pension insurance payment can be adjusted according to economic conditions and it will help to build a reasonable pension system, said Jin Weigang, head of the social security research institution under the Ministry of Human Resources and Social Security.
He said that for pension insurance payment, the situation is not always lower, the better, and to further reduce the rate, many conditions should be created, such as allocating State-owned funds to the pension payment, basic pension funds of urban citizens being charged by the government, and adjusting the retirement age.