The State Council has long been introducing tax reduction policies on a consistent basis. These measures have ushered in ample benefits to market entities, as well as citizens, which has helped people save a substantial amount of money.
As Premier Li Keqiang stated at a press conference during the two sessions this year, reduction on taxes and fees is an out-and-out pragmatic reform by the government, which should be pushed forward at full capacity. With less fiscal revenue, more money will be saved for people at large.
According to the report on the final State accounts in 2017, the lump sum of the annual newly-added tax reduction outstripped 380 billion yuan ($55.23 billion).
When it comes to 2018, the figure will be larger than that again for enterprises and citizens. It’s worth noting that there are two milestone dates in the process of realizing the 800 billion yuan tax cuts, May 1 and July 1.
On May 1, the government rolled out a slew of VAT reform policies that benefit both domestic and overseas enterprises, which will effect a 400 billion yuan tax reduction. Logistics enterprises were granted a 50 percent reduction valid from May 1 to Dec 31, 2019 on urban land utilization taxes and import tariffs on 28 drugs, including cancer treatment medication, came into force on May 1.
On July 1, China introduced an average 8.8 percent tax rate decrease on import tariffs for 1,449 taxable items that are daily consumer goods. An average 46 percent tax reduction was enforced on automobile products’ import tariffs and a preferential policy was carried out, benefiting venture capital firms, personal angel investment at the seed stage and technology start-ups with taxable income deduction on 70 percent of the investment volume. A preferential policy was implemented catering to scientific and technical personnel, for whom only 50 percent of the cash bonus translated from professional technology achievements is subject to individual income tax payment. A 50 percent reduction on the vehicle purchase tax was put into effect for trailer purchasers, which remains valid until June 30, 2021.
Additionally, a draft of the amendment to the Law on Personal Income Tax was presented to the Standing Committee of the National People’s Congress on June 19 for discussion. The amendment proposed raising the threshold of individual income tax from 3,500 yuan to 5,000 yuan per month. In addition, expenses on children’s education, further education and medical treatment for serious diseases, house loan interest, and house rents and the like will be deducted for the very first time.