CHINA Government Work Report priorities unveiled

CHINA

Government Work Report priorities unveiled

China Daily

11:29, March 31, 2021

A worker is seen at a factory in Lianyungang economic and technological development zone of Lianyungang, East China's Jiangsu province, June 29, 2020. (Photo: Xinhua)

The State Council, China's cabinet, recently issued a guideline on implementing key tasks in this year's Government Work Report. It put report tasks into 44 priorities in 38 aspects and 12 parts, and assigned them to relevant State Council bodies and local authorities with detailed responsibilities and timeframes.

According to the guideline, the ratio of extra tax deductions on enterprises' R&D expenses will maintained at 75 percent, while for manufacturing firms, the ratio will be raised to 100 percent. This task has been assigned to the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology, and relevant policies will be unveiled by the end of April.

Continual implementation of this policy, which aims to directly reduce enterprises' R&D costs via tax cuts, played an important role in encouraging business innovation, Chen Long, a researcher at the Chinese Academy of Fiscal Sciences, told the Securities Daily.

This year, the country increased the ratio of extra tax deductions on R&D expenses of manufacturing enterprises to 100 percent, which means that for every 1 million yuan spent on R&D, a company will see 2 million yuan deducted from its taxable income. This policy is expected to reduce corporate taxes by another 80 billion yuan this year, on top of the 360 billion yuan tax cuts last year.

It is also in line with the central government's deployment to build up a new development paradigm, promote science and technology self-reliance and self-improvement, and maintain the proportion of the manufacturing sector, Chen added.

According to the guideline, the country will continue its institutional tax reduction policies, extend the duration of several temporary tax relief measures, and implement new structural policies, in a bid to offset the impact of the COVID-19 pandemic.

The VAT threshold for small-scale businesses was raised from 100,000 yuan to 150,000 yuan in monthly sales. On the basis of preferential policies already in force, the government will halve the income tax of micro and small enterprises and self-employed individuals on annual taxable income below 1 million yuan.

At present, financial and taxation departments have unveiled some tax relief policies. On March 23, the Ministry of Finance and the State Taxation Administration said in a joint statement that the duration of some preferential tax policies will be extended till Dec 31, 2021. For small-scale VAT taxpayers in Hubei province, the tax rate will be reduced to 1 percent from 3 percent for taxable sales income and some prepaid VAT items.

Zhang Yiqun, a scholar from the Society of Public Finance of China, predicted that a total of 60,000 small and micro enterprises and self-employed individuals will be benefit from this year's tax relief policies, with total tax cuts of more than 2 billion yuan.

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