State Council measures help reduce taxes and costs

2016-12-15
english.gov.cn

In early 2016, Premier Li Keqiang said in his government work report that efforts should be made to reduce taxes and cut costs so that financial burdens on enterprises would be lifted.

The State Council then carried out a series of policies and measures, including replacing the business tax with value-added tax and lowering electricity costs for industry and commerce, in a bid to relieve more than 500 billion yuan ($72.4 billion) in financial burdens of enterprises and individuals.

The following are some policy measures to reduce financial burdens in the market.

1. Comprehensive implementation of replacing business tax with value-added tax to stimulate enterprises

Since May 1, replacing the business tax with value-added tax was extended to construction, real estate, finance, and living services.

So far, the tax reform is being implemented across the nation and will reduce costs for enterprises by more than 500 billion yuan this year.

2. Reform of resource tax to reduce burdens on enterprises

On May 10, the Ministry of Finance and the State Administration of Taxation issued a circular regarding comprehensive implementation of resource tax reform, which would be enforced on July 1.

The move would reduce tax burdens and lower costs for most enterprises.

3. Increase tax refund rate to promote competitiveness of enterprises in international market

On Nov 5, the Ministry of Finance and the State Administration of Taxation issued a circular declaring that the tax refund rate will be raised to 17 percent for more than 400 kinds of commodities, such as mechanical and electrical equipment and oil product.

The move is aimed at promoting stable exports and increasing the competitiveness of China’s export products.

4. Streamlining government fees to lower costs for enterprises

Since Feb 1, the State Council streamlined a series of government fees, including new vegetable planting land construction fees and forest cultivating fee, reservoir region immigration fee, and local governmental fees.

The measure will cut about 26 billion yuan for enterprises each year.

5. 18 administrative services charges eliminated to improve enterprises’ competitiveness

On April 28, the Ministry of Finance and the National Development and Reform Commission released a circular to extend free administrative services to 18 items, including plant quarantine service and administrative approval service for new animal medicines.

6. Streamline earnest payments to reduce institutional trade costs

On June 27, the State Council issued a circular to streamline and regulate earnest payments in engineering and construction sectors to reduce the burden on enterprises and stimulate the vitality of the market.

The State Council decided to cut earnest payment items, except those needed for construction enterprises’ bidding, contract implementation, construction quality, and payment to migrant workers in accordance with laws and regulations, which can be paid by the enterprise through letters of guarantee issued by banks.

7. Streamline and regulate administrative service fees to reduce enterprises’ burden

On July 15, the Ministry of Finance, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and the Ministry of Civil Affairs jointly published a circular to streamline and regulate administrative fees for enterprises.

8. Lower labor costs for enterprises

On Aug 22, the State Council issued a circular to lower the costs of endowment insurance, medical insurance, unemployment insurance, employment insurance, and maternity insurance as well as the employee housing fund.

According to estimates, the measure will reduce 150 billion yuan in enterprise costs.

9. Lower electricity costs for industry and commerce

Since January, electricity costs for industry and commerce were lowered by 0.03 yuan per kilowatt.