Tax reform to reduce corporate costs
China’s new tax reform will ease the tax burden for the country’s small and medium enterprises, and revive and enhance their healthy development, experts said on Tuesday.
The Chinese government announced a long-awaited tax reform on Monday, under which companies will no longer pay value-added tax (VAT) for equipment purchases.
It would reduce the tax burden on companies and save them an estimated 120 billion yuan ($17.59 billion) a year, the biggest cut ever, said officials from the Ministry of Finance (MOF) and State Administration of Taxation.
In 2007, the VAT revenue exceeded 1.5 trillion yuan, accounting for 31 percent of the total tax income.
Under the reform, VAT exemptions for exempted imported equipment and VAT rebates for foreign companies buying made-in-China would be both abolished.
Zhang Bin, researcher at the Institute for Finance and Trade Economics of Chinese Academy of Social Sciences, said the reform put foreign and domestic companies on an equal footing.
MOF fiscal science institute director Jia Kang said the reform would encourage enterprises to improve equipment and technology, and push them to become the main body of long term market investment.
Renmin University of China Professor An Tifu said the sound development of small and medium enterprises would offer more job opportunities.
Xie Baijun, chairman at a Zhejiang-based thermo-electric company, said the reform would help pare costs on technological upgrades.
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