BEIJING－Chinese entrepreneurs from all walks of life are upbeat following the government’s sustained efforts to lower the corporate burden.
“The implementation of tax and fee cuts helps improve enterprise profits, alleviates capital pressure, and solidifies our confidence in business development,” said Dai Jishuang, chairman of Shenyang Blower Works Group Corporation, at a symposium hosted by the State Taxation Administration earlier this month.
Following colossal tax and fee cuts of around 1.3 trillion yuan (about $194 billion) in 2018, China will reduce the tax burdens and social insurance contributions of enterprises by nearly 2 trillion yuan this year.
On April 1, the country started to reduce the current value-added tax rate of 16 percent for manufacturing and other industries to 13 percent. Starting May 1, the government will also cut the share of enterprise contributions to urban workers’ basic old-age insurance from 20 percent to 16 percent.
The new VAT cut policy will save 23.11 million yuan for Shenyang Blower Works Group Corporation this year, according to Dai.
For China Delixi Holding Group, this year’s tax cuts will amount to 111 million yuan. “This will enable us to invest more in scientific research and development, promoting the enterprise’s competence,” said Hu Chengzhong, chairman and CEO.
“A universal tax cut will greatly ease the tax burden of companies in purchasing fixed assets like machinery equipment and save costs for equipment manufacturers, resulting in more room for investment,” said Bai Jingming, vice-president of the Chinese Academy of Fiscal Sciences.
The massive corporate tax cuts this year showcased the central government’s efforts to inject more energy into economic development and to make sure market entities receive benefits, which will help stabilize market expectations of the economy, according to Bai.
He believes the move will unleash Chinese people’s unlimited potential in innovation and creation and boost the nation’s high-quality development.
“The nationwide tax cut policy is a guarantee of innovation-driven development,” said Chen Yanshun, chairman and CEO of BOE Technology Group.
The tax cut policy will help BOE lower VAT expenditure by 3.7 billion yuan this year, according to Chen.
“The BOE Technology Group will put the tax cut bonus into scientific research and development and make a greater contribution to the country’s strategic emerging industries,” said Chen.
The tax cut bonus will be used for research and production, and thus boost production efficiency and profitability. After forming a virtuous circle, enterprises could contribute more to the country’s tax income, according to Zhuang Dan, president of Yangtze Optical Fibre and Cable.
ActBlue, an environmentally friendly technological innovative enterprise founded in 2009, will save more than 7 million yuan this year as the implementation of lower VAT rates started on April 1. The cuts will also reduce its social insurance costs by 820,000 yuan when the new policy goes into effect on May 1.
However, ActBlue Chairman Liu Yi wants more. “China’s environmental protection industry is still at the beginning stage and tax preferential policies are needed for industrial development. Despite the government’s existing efforts in this respect, we need more,” said Liu.
The major target of such tax cuts in 2019 would be small and micro companies, which provide majority of jobs, according to Bai.
Policymakers attach great importance to employment because it is an area that directly affects everyday life and determines the health and prospects of the economy.
China’s economy, the second largest in the world, expanded 6.6 percent to exceed 90 trillion yuan in 2018. The growth target for this year was set at 6-6.5 percent.