Beijing vows tax relief for start-ups and innovators
Beijing says it will cut "unnecessary" tax hurdles to support emerging industries such as e-commerce.
Beijing says it will cut "unnecessary" tax hurdles to support emerging industries such as e-commerce.
The tax relief is aimed at easing the burden on innovative and start-up firms, which have been earmarked by Premier Li Keqiang as playing a key role in speeding up industrial upgrading, but face challenges to survive as the economy expands at its slowest pace in six years.
"We need to actively support healthy development in new industrial patterns and new business models," the State Administration of Taxation said on Wednesday. The government would make great efforts to bolster society-wide innovation, it said.
The agency urged local tax departments to ensure the proper implementation of relief policies already announced for new start-ups, small companies with high growth potential and innovative businesses. Beijing has previously halved corporate income tax and halted value-added and sales taxes for micro-sized firms.
The tax agency vowed it would also stop charging any "unnecessary" taxes and fees for innovative enterprises. It ordered tax officials nationwide not to carry out so-called comprehensive tax assessments and checks on small and innovative firms.
"The steps are aimed at ensuring tax policies aren't overly harsh for small firms as they are particularly important to the country's job stability, innovation and economic development," said Li Hongxia, a professor of finance and taxation at the Capital University of Economics and Business.
Mainland GDP growth slid from double digits in the last decade to 7 per cent in the first quarter this year, just meeting the government's annual growth target.
Some researchers estimate the taxes and fees paid by all companies on the mainland account for more than a third of the country's GDP.
Small firms account for most new jobs on the mainland. Innovative companies, such as e-commerce firms, are key job sources for new university graduates - expected to total 7.5 million this year - who have faced difficulties in finding jobs that match their knowledge and skills.
Start-ups, hi-tech companies and the booming internet sector have in part offset slowing growth in traditional manufacturing in recent years amid rising labour costs. Several world-class companies, including Alibaba and Tencent, have emerged with the help of tax incentives.
"In the next three to five years, we foresee the internet revolutionising the services sectors in China," Credit Suisse has forecast.
