China's pandemic tax relief and what it means for trade firms
By Chen Tong
China cut a total of 2.5 trillion yuan ($390 billion) in taxes to help companies through the COVID-19 pandemic, hitting a historical high.
Experts said the tax relief measures especially helped foreign trade firms combat the impact of the pandemic.
For export firms, "tax reductions lowered their costs, and gave them more confidence in economic growth during the pandemic, especially the small- and medium-sized companies," Wang Huayu, deputy director of the Fiscal Taxation Law Research Center under Shanghai Jiao Tong University.
Shanghai Global Trading Corporation, a subsidiary of China's car manufacturer Geely, handles exports for the auto giant. Its businesses were badly hit in the beginning of last year until the Shanghai tax bureau came along to help.
"Our cars were being exported to Malaysia. If the tax rebates arrived late, that would affect our ability to purchase raw materials," said Xiong Yinghui, operational director of Shanghai Global Trading Corporation.
Last year more than 25,000 firms were able to take advantage of the quick tax rebate procedures in Shanghai, which wound up facilitating 7.4 million yuan of financing. Firms using the new procedures were concentrated in the manufacturing industries.
"We launched a variety of policies to quicken tax procedures for equipment makers and textile firms such as putting offline services online, and speeding approval procedures and tax rebates. The average tax rebate period was only five days, half the period required by the state taxation administration," said Liu Zhenyu, deputy director of Tax Rebates, Shanghai Tax Service.
China's total imports and exports expanded by some 2 percent year on year with value to more than 32 trillion yuan in 2020, hitting a record high despite a worldwide slump in shipments. Experts say the favorable policies brought in by the tax bureau played a crucial role in the recovery.