Loans to Small and Micro-enterprises Made Exempt from Value-added Tax

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The central government has launched new measures to raise levels of financial inclusion on the part of Chinese lenders.

China’s Ministry of Finance and the State Administration of Taxation have issued a directive that makes interest earnings from loans to small and micro-enterprises exempt from value-added tax, as part of efforts to expand support for small business.

According to the direct the exemption will run from 1 September 2018 to 31 December 2020.

The move comes amidst a push from Chinese regulators to shore up financial inclusion and improve the ability of banks and other institutions to “service the real economy.”

At the end of June Beijing unveiled a goal of 23 measures to support financial inclusion for small and micro-enterprises.

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