“The tax and fee cuts are a buttress to implement a proactive fiscal policy to maintain a stable macro economy, so we must carry out the initiative and punish those who neglect their duties,” Premier Li Keqiang said at a State Council executive meeting on Aug 30.
The Government Work Report delivered by Premier Li set a clear target to reduce 800 billion yuan in taxes for enterprises and individuals, and another 300 billion yuan in non-tax fees for market entities.
Since the year’s beginning, a slew of measures have been rolled out to support small and micro enterprises as well as entrepreneurship and innovation. The executive meeting on Aug 30 decided to release new measures to boost the real economy.
The Premier said the economy faced immense downward pressure several years ago, with hardships in fiscal revenue, but the country would not levy more taxes, instead it has promoted value-added tax reform to stimulate the market. Now, facing a complicated international situation, tax and fee cuts should be pushed further to anchor market expectations.
Prosperous enterprises will produce a thriving market and strong economy, the Premier said.
More steps will be taken to support the real economy while all existing measures are fully implemented, according to the meeting.
Enterprises whose production is halted or business suspended due to the required cutting of overcapacity or restructuring will see their real estate tax and urban land-use tax reduced or exempted. The investment businesses of social security funds and basic pension insurance funds will enjoy a tax break.
The meeting also decided to expand the value-added tax exemption on lenders’ interest income for loans to micro and small businesses with a credit quota of up to 10 million yuan, up from the previous credit quota of 5 million yuan, starting Sept 1 to the end of 2020.
Corporate income tax and value-added tax on foreign institutions’ interest gains from onshore bond market investments will be exempted for three years, in an effort to open up more and to further attract overseas capital, the meeting decided. Export rebate rates for some products will also be improved. These incentives are expected to cut the corporate tax burden by 45 billion-plus yuan this year.
Meanwhile, administrative charges for enterprises must be trimmed. Any arbitrary charges should be forbidden, the Premier stressed at the meeting.
Supervision undertaken by the State Council inspection team and the National Audit Office should be enhanced over the implementation of tax cuts, said the Premier, and he called for government departments to put forward more measures to lift market burdens to bring real benefits to enterprises and the public.