Chinese Govt Propose Plan For More Reduction On Tax, Fees

If the tax cut proposals are passed, the value-added taxes may be lowered by 800 billion yuan overall
05 Mar 2019 17:36
Chinese Govt Propose Plan For More Reduction On Tax, Fees

The Chinese government will propose a detailed plan to the top legislature this week to reduce taxes and fees.
This means an annual target that would cut more than 1.3 trillion yuan ($194 billion) to promote manufacturing and strengthen private companies’ confidence.

China Daily reported that the 2019 tax cut plan is expected to be more aggressive than last year’s.
It will focus on lowering value-added tax rates, an official in the Ministry of Finance told China Daily.
The official asked not to be named because details were not yet authorized for release.

Premier Li Keqiang is scheduled to deliver the annual Government Work Report at the opening of the second session of the 13th National People’s Congress on Tuesday, and more details about the tax arrangement are expected to be revealed.

Some additional information may be released about lowering corporations’ social security payment rate, the ministry official said.

China achieved its goal to cut about 1.3 trillion yuan in taxes and fees in 2018, including the value-added tax, individual income taxes and corporate income taxes for small and medium-sized enterprises, according to the ministry.

Ren Rongfa, deputy head of the State Taxation Administration, said that tax and fee cuts figure prominently in the tax authorities’ work this year.

“We have updated the tax levy system and statistical accounting system to prepare for the further reduction,” Ren said.

Ren added that 31 municipalities and provincial-level governments have all issued tax-cut plans for local taxes.

If the tax cut proposals are passed by the NPC, the value-added taxes may be lowered by 800 billion yuan overall, according to Robin Xing, chief economist in China for Morgan Stanley. He expected the VAT rates to be lowered by 1 to 2 percentage points for each tax bracket.

“The move is likely to lift companies’ profits by 2 percent,” Xing said. “The effect will be seen later in lower consumer product prices and higher profits by manufacturers.”

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