In this undated photo, an employee observes a robotic arm working at a smart production facility in Wenzhou, China's Zhejiang province. SU QIAOJIANG BEIJING China will strengthen fiscal policy assistance to boost growth this year and will move steadily on delivering preferential tax and fee policies to struggling small businesses, an official said on Friday.
In response, experts believe that a policy stance will help lift the country's small businesses and consolidate the foundation for this year's recovery.
At a news conference, Zhu Zhongming, vice-minister of finance, spoke about China's decision to extend preferential tax policies for businesses.
He said that the move aims to strengthen small businesses so they can leverage their role in the larger economy fully, in the context of innovation and this year's growth recovery.
The Cabinet of the State Council, China's Cabinet, decided on March 24 to extend preferential tax policies to small firms and individual businesses until the end of 2024.
Small and micro enterprises as well as self-employed individuals will pay less taxes thanks to the new calculation method of taxable incomes, according to the policies.
Tax and fee cuts are part of a proactive fiscal policy, according to Zhu.
The Ministry of Finance has worked closely with competent authorities to ensure that preferential tax and fee policies are stable and consistent. We believe that the policy extension will reduce burdens for companies by more than 480 billion yuan per year. The ministry will consider the need for both structural adjustment and aid to struggling businesses as it goes forward in the process of customizing fiscal policies, as well as the process of customizing fiscal policies, according to Zhu.
The current external environment is volatile and the foundation for China's economic recovery is not yet solid, with pressures coming in from demand contraction, supply shocks and weaker expectations all of which remain significant factors, he said.
To address these risks and challenges, it is necessary to step up the fiscal policy's macroeconomic adjustments, said Zhu.
Su Jingchun, an associate researcher at the Chinese Academy of Fiscal Sciences, said it was critical for this year's recovery and said it was important to extend preferential tax policies to smaller firms and individual businesses.
A thriving small-business community has a direct influence on China's market vitality, energizing consumption and lifting households' disposable incomes. Su said small businesses play an important role in job creation.
Tax and fee cuts are intended to help these smaller businesses benefit from the economic recovery and to survive and thrive. Their prosperity will help to growing consumption, which is a key factor in boosting domestic demand this year. The State Council policy says that enterprises entitled to the additional pretax deduction of 75 percent for research and development expenses are allowed to apply for the 100 percent deduction, and it will become a long-term institutional arrangement.
It will boost companies' confidence in building their innovation capacity and boosting their research capabilities, Su said.