Lower Taxes for Business in China
December 29, 2011 Taxation in China
BEIJING – Chinese policymakers have revealed the government’s plans to lower tax obligations and increase public spending.
On December 26th at a budget meeting held in Beijing, Chinese policymakers outlined the government’s plans for spurring economic growth in 2012, confirming that public spending will be increased and new tax changes will be instated to help small businesses in the country.
Throughout 2012 the government will increase spending on social security, housing projects, education, healthcare, and other measures aimed at boosting economic productivity and national welfare. During a speech delivered at the meeting the Vice Premier Li Keqiang said that in 2011 government spending grew by 24.3 percent compared to 2010, to a total of RMB 8.9 trillion, while the government’s total revenues rose by 26.8 percent to RMB 9.73 trillion.
While giving a speech at the meeting the Finance Minister Xie Xuren said that China will aim to help small and medium sized businesses in 2012 by increasing the threshold for payment of value added taxes and corporate income taxes. New policies will also be instated over the next four years to halve the rate of corporate income taxes faced by small businesses.
In order to provide greater access to capital to small companies, the government will also drop stamp tax on lending contracts issued by banks for the next three years. In an effort to aid micro sized businesses the government will also stop collection of 22 separate business administration fees.
The new tax measures are aimed at encouraging increasing the number of small businesses in China, and to stir up greater consumer demand in order to compensate for waning economic conditions in China’s main export partners.
Photo by HibaHaba