Official: China to reduce taxes on larger scale, broader base
China's taxation authority is working with other government agencies to carry out tax reductions on a larger scale and broader base to support the private sector, a senior official said on Friday.
Wang Jun, head of the State Administration of Taxation (SAT), made the remarks during an interview.
Since the beginning of this year, China has put into effect a raft of measures to relieve tax burdens on the real economy. Tax revenue grew 16.8 percent year on year in the first four months, but slumped to 6.4 percent in the following six months as the tax-cutting value-added tax (VAT) reform kicked in on May 1.
Wang predicts the growth rate for the full year will fall to a level that generally matches China's GDP increase. "The amount of tax cuts this year will exceed expectations thanks to the emerging effects from reduced individual income tax and higher export rebates in the next two months."
More policies for private firms
The SAT will roll out targeted policies to help private firms that have good records but suffer from tight cash flows, such as suggesting that local governments give them a respite for paying taxes, Wang said.
Financial institutions will continue to be exempted from VAT for their interest incomes from loans to small and micro companies in an effort to encourage a flow of funds to the cash-starved private sector, Wang said.
The SAT will expand its program that allows businesses with sound tax-paying records to secure loans without collateral, he noted.
Chinese companies operating abroad will see decreased burdens as more efforts will be taken to implement tax deductions, Wang said, adding that international cooperation will be promoted to prevent duplicate taxation.
Other measures in the pipeline include shortening tax payment time, promoting electronic invoices and cracking down on tax fraud, according to Wang.
Private enterprises have become an important source of China's tax revenue, contributing to more than half of the total.