More measures to cut taxes for financial enterprises were pledged at the State Council executive meeting on July 27, according to Xinhua News Agency.
The State Council also planned to boost fiscal reform, enhance taxpayer services and guide enterprises to adapt to the new fiscal system more effectively.
Since the reform of replacing the business tax with value-added tax (VAT) was launched in 2012, the tax burden on many enterprises has been reduced. From 2012 to 2015, 650 billion yuan in taxes have been cut. “It will reduce the cost for enterprises and help them tackle the sluggish economy,” said Hu Yijian, a professor at Shanghai University of Finance and Economics.
But some financial enterprises complain that they have to pay more taxes after the reform. According to Hu, the financial sector has many industries including banks, insurance, security and funds. It is difficult to reform the taxpaying system for different industries and complex financial businesses with a standardized approach.
Shen Yinghua, a partner at KPMG Beijing office, said that enterprises need time to adapt to the new fiscal system. In the early stage, some companies may not be able to get tax deductions because they have not updated their tax management.
The government will optimize fiscal policies in response to appeals from financial enterprises, vowing to fulfill the promise of cutting taxes for all industries, Xinhua reported.
As for the financial enterprises, the key to reducing their tax burden is to adapt to the value-added tax system. “They should refine payment management and perfect the deduction process in order to enjoy the deduction of VAT input tax,” Hu said.