Business
23:09, 07-Mar-2018
Data Sessions: What does tax reduction mean to China?
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Last year, some 918.6 billion yuan (about 145.4 billion US dollars) were saved thanks to the replacement of business tax with a value-added tax (VAT) in China. This year, tax reduction will continue which, from experts’ perspectives, may reinforce the competitiveness of the country's economy.
China completed the replacement of its business tax with a VAT in 2016, and the news system has been aiding enterprises significantly.
According to a report by Shanghai University of Finance and Economics, during the first year of tax replacement, tax burden of telecoms decreased by more than 70 percent. Postal services, modern services, and life services all had double-digit reduction rates.
Moving to a VAT system has boosted investment by 6.92 percent and employment by 0.74 percent, while lowering the price level by 2.75 percent.
This year, with the economy on a firm footing and fiscal revenue increasing, China will continue its efforts in tax reduction to lower business costs.
According to the government work report, China will continue to reduce taxes on businesses and individuals by more than 800 billion yuan in 2018. Meanwhile, Chinese Finance Minister Xiao Jie announced Wednesday that the three current VAT tax brackets will be reduced to two.
The tax cut will encourage small- and medium-sized enterprises, strengthening the competitiveness of economy in the end, Zhao Zhongxiu, vice president of the University of International Business and Economics, told CGTN.
The finance minister also said China would plan to cut taxes, boost spending and shrink the deficit. Zhao said that the task is a little challenging and needs more innovation in the money market and bond market.
(CGTN’s Wang Yue also contributed to the story)
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