China is unveiling new tax cuts to boost the real economy while working to ensure full implementation of all existing tax reduction measures, a State Council's executive meeting presided over by Premier Li Keqiang decided on Thursday.
The Chinese government places high importance on cutting taxes and non-tax fees. President Xi Jinping emphasized the need to stick with the proactive fiscal policy and prudent monetary policy, and called for the fiscal policy to play a bigger role in boosting domestic demand and economic restructuring. Premier Li Keqiang laid out clear targets for tax and fee reduction in this year's Government Work Report, and underlined on multiple occasions the need for a more proactive fiscal policy.
The Thursday meeting was the ninth time for the issue of tax and fee cuts to be included on the agenda of the State Council's weekly executive meetings since the new government took office last March. Measures introduced on tax and fee cuts since earlier this year have kicked in to support the micro and small businesses and spur innovation.
"In the context of new developments both at home and abroad, tax and fee cuts are important for sustaining the positive momentum of steady economic growth. More tax incentives should be rolled out and all measures introduced fully delivered," Li said, "Tax and fee reduction is part and parcel of the proactive fiscal policy, and something that we are capable to do now."
It was decided at the Thursday meeting that more steps will be taken to support the real economy while all existing measures are fully implemented.
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 value-added tax exemption on lenders' interest income for loans to those micro and small businesses with a credit quota of up to 10 million yuan, up from the previous credit quota of five million yuan, between 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 as an effort for greater opening up and further attract overseas capital, the meeting decided. Export rebate rates for some products will also be improved.
The above-mentioned incentives are expected to cut corporate tax burden by 45 billion-plus yuan this year.
"A thriving business community is vital for creating jobs, sustaining growth, increasing fiscal revenues and anchoring market expectations. Tax and fee reduction shall send a positive signal. All new measures in tax and fee cuts must be implemented without delay," Li said.
He called for working out additional steps for tax and fee reduction to bring benefits to enterprises and families.