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Tax and fee cuts this year

Updated: Aug 7,2017 4:57 PM     english.gov.cn

This year, the State Council has taken measures to cut taxes and corporate fees worth over 1 trillion yuan ($148.8 billion), fulfilling Premier Li Keqiang’s promise when he met the press in March.

Tax cuts

Simplify VAT structure

From July 1, 2017, the structure of value-added tax has been simplified, with the 13-percent tax bracket being canceled.

The tax rate for sellers and importers of goods such as agricultural products, tap water, heating, gas and petroleum has been cut to 11 percent.

Expand tax preference for small enterprises

The upper limit of taxable income for small and micro profit enterprises that can receive tax preferences has been raised from 300,000 yuan to 500,000 yuan. Companies whose taxable income is below 500,000 yuan can deduct 50 percent of their taxable income. And the rate of corporate income tax is 20 percent.

The policy is effective from Jan 1, 2017, to Dec 31, 2019.

Expand tax preference for technology companies

Research and development expenses of small and medium-sized technology companies can be deducted from their taxable income, with the additional deduction of 75 percent of the research expense. The policy is effective from Jan 1, 2017, to Dec 31, 2019.

Tax preference for venture capital companies

Venture capital companies that have invested in startups for two years can deduct 70 percent of their investment volume from their taxable income.

Commercial health insurance tax deduction

From July 1, 2017, taxpayers’ expense of purchasing qualified commercial health insurance products can be deducted in their personal taxable income, up to 2,400 yuan a year (or 200 yuan per month).

Extension of some expired tax preferences

Some tax preferences that expired at the end of 2016 will be extended to the end of 2019, including preferences for logistics companies, financial institutions that issue petty loans to farmers, and for college graduates and retired soldiers who start businesses.

Fee cuts

Cut government fees

From April 1, some government fees levied on enterprises have been cut, including the special fees for urban utility and new wall materials, and the fees for employment of disabled persons.

Over 40 billion yuan will be saved by enterprises through the two cuts.

Cut administrative charges

From April 1, 41 administrative charges that were set up by the central government have been canceled or reduced. The trademark registration charge has been cut by 50 percent.

From July 1, more administrative charges were cut, including the resource use fee for telecom, phone number and wireless frequency, and license charges for exit and entry, which can save citizens and companies 2.6 billion yuan.

Cut unemployment insurance rates

From Jan 1, 2017, provincial-level regions whose unemployment insurance rate was 1.5 percent can cut it to 1 percent. The fee cut, which applies to 22 provincial-level regions, can save enterprises about 23.4 billion yuan.

The policy is effective until April 30, 2018.

Cancel cell phone long-distance and roaming charges

From Sept 1, cell phone long-distance and roaming charges will be canceled, according to China Telecom, China Mobile and China Unicom.

Cut internet fees for small and medium-sized enterprises

From May, the dedicated internet access fee for small and medium-sized enterprises have been cut by 15 to 20 percent.

The move is expected to save enterprises over 10 billion yuan in 2017.

Cut electricity costs

Electricity costs have been cut by RMB 1.1 cent per kilowatt hour, due to the cancellation of urban utility surcharges. It will save 35 billion yuan in power costs.

Regulate charges raised by national industry associations

The Ministry of Civil Affairs issued a circular to regulate corporate charges raised by national industry and trade associations that have been disconnected from the government.

Allow insurance companies to lower auto insurance rates

The China Insurance Regulatory Commission has expanded the pricing power of insurance companies, allowing them to lower auto insurance rates by up to 62 percent.

Suspend supervision fees for banks and insurance industry

Supervision fees — including institution supervision fee and business supervision fee — for banks and insurance companies have been suspended, which can save enterprises 8.4 billion yuan.

The policy is effective from July 1, 2017, to Dec 31, 2020.

Cut charges on major water conservancy projects

Charges for construction of major water conservancy projects and subsidies to people relocated due to building large and medium-sized reservoirs have been cut by 25 percent.

It can save enterprises approximately 16 billion yuan.

Cancel special fees for structural transformation of industrial enterprises

Special fees for structural transformation of industrial enterprises have been canceled, starting from July 1, 2017. It will save enterprises 39 billion yuan every year.

Reduce quality deposits in engineering construction sector

From July 1, 2017, the rate of quality deposits reserved in project payments was reduced from 5 percent to 3 percent.

It will cut enterprises’ burden by 210 billion yuan.

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