More than $166b in tax breaks for firms, individuals

China will cut more than 800 billion yuan (S$166 billion) in taxes for businesses and individuals, with a focus on increasing support for micro, small and medium-sized enterprises.

More will also be done to help these smaller firms raise funds, Finance Minister Xiao Jie said yesterday.

Value-added tax rates will be adjusted to ease the burden for the manufacturing, transport and other sectors to help support the development of the real economy.

The preferential policy to cut the corporate tax for small and micro businesses by half will be significantly expanded to benefit more firms.

And the government will offer a one-off tax deduction for new facilities and equipment purchases of less than 5 million yuan in the year of purchase, Mr Xiao said.

Financial officials repeated earlier announcements that individuals will enjoy tax breaks as the government looks to raise the personal income tax threshold and create expense deductions for items like children's education and treatment for serious diseases.

But they did not elaborate on what these measures entail.

These tax cuts, together with an additional 300 billion yuan of reductions in administrative fees and operating charges, will lower the total tax burden by more than 1 trillion yuan this year.

Such cuts will "stimulate the vitality of market players and improve the quality and efficiency of economic development", said Mr Xiao at a briefing on the sidelines of the annual parliamentary meeting.

The government will also use its procurement policies to support the development of micro, small and medium-sized enterprises.

One way is to reserve a share of government procurement for these smaller firms and another is to encourage them to form joint-venture bids for such government projects, he added.

A version of this article appeared in the print edition of The Straits Times on March 08, 2018, with the headline 'More than $166b in tax breaks for firms, individuals'. Print Edition | Subscribe