Finance officials specify tax reduction measures

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06:53

China will continue to relieve pressure on enterprises through tax and fee reductions, Liu Kun, the country's finance minister said at a press conference during the second session of the 13th National People's Congress in Beijing on Thursday.

As the 2019 government report said, this year there will be tax and social insurance charge reductions worth almost two trillion yuan (298 billion U.S. dollars) for enterprises, Liu said, noting the reduction is the top priority of China's fiscal policies for 2019.

To carry out the reduction plan, China launched several policies at the beginning of this year to adjust standards for small and micro enterprises, a measure described as "a major move" by Liu Wei, deputy minister of finance at the press conference.

New standards to define small and micro enterprises have been raised to holdings of 50 million yuan in general assets, up from a previous 30 million yuan for industrial enterprises and 10 million yuan for others, Liu said.

"Companies with assets under 50 million yuan, no more than 300 employees, and income tax payments of no more than three million yuan are all defined as SMEs," Liu said.

The new higher standard indicates more enterprises will be labeled as small and micro businesses, entitling them to more preferential tax policies.

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The government also raises the thresholds for enterprises to different extents varied on revenue, and all these measures entered effect from January 1, Liu Wei said.

Other supportive measures include 10 billion yuan (1.49 billion U.S. dollars) allocated for loan discounts to startups and lower loan application conditions, he said.

Liu also said at least 30 percent of government purchase orders are reserved for medium and small enterprises to encourage their development.

Both officials stressed at the press conference that these measures are designed to enable enterprises to gain tangible and concrete support, and also to offer them a favorable policy environment for them to face challenges with better development.

Some worry that the huge tax reduction will hurt government revenues. The finance minister said the income dip will pose a real challenge, yet the government will work to make every penny count.

The minister also said the government will support the deepening of supply-side structural reform and work to fight the "three tough battles", and will spend over 126 billion yuan on poverty reduction, mostly for deeply poverty-stricken areas, a figure that is up 18.9 percent from the previous year.

The revenue will also go to support agricultural development, research and innovation, balancing out regional development and improving people's livelihoods.

(Han Lin & Zhang Jing also contributed to the story)