China’s Ministry of Finance expects the country’s tax and government fee burden to be reduced by in excess of 1 trillion yuan (approx. USD$160 billion) in 2018.
Speaking at the 2018 Boao Forum for Asia on 11 April, vice-minister Cheng Lihua (程丽华) said that starting from 1 May China would continue to deepen value-added tax reforms, focusing in three key areas:
1. Reduction of the industrial value-added tax in sectors such as manufacturing and transit.
2. Further unification of the threshold for the payment of value-added tax by small-scale tax payers, and an increase in the annual sales threshold for small-scale tax payers that are industrial or commercial enterprises to 5 million yuan, from 500,000 yuan and 800,000 yuan respectively at present.
3. Further expanding the scope for rebates, focusing primarily on modern services sectors such as equipment manufacturing, advanced manufacturing and research and development, as well as online companies.
Cheng said that these three measures would jointly reduce the tax burden by as much as 400 billion yuan across a full year.
According to Cheng the current round of tax reforms also cover government administration fees and government funds, including pension funds, unemployment funds, occupational injury funds and residential housing public funds.
Some fees will be reduced or suspended completely, with other policies for administrative fee reductions slated for reinstatement following their expiration, achieving a total fee reduction for enterprises of approximately 300 billion yuan.
Cheng said that China will unveil further tax reduction measures in the near future, including personal income tax reforms and the expansion of supports for micro-enterprises, which will bring the full year tax reduction to over 1 trillion yuan.