By Wang Wenzheng, People’s Daily Overseas Edition<\/p>\n
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China rolled out 28 targeted and favorable tax policies in seven batches in 2020, cutting taxes and administrative fees by over 2.5 trillion yuan (about $390 billion) for companies.<\/p>\n
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Due to the COVID-19 outbreak, many small and micro businesses and self-employed people encountered difficulties in 2020, including fewer customers, rising costs, and lack of capital.<\/p>\n
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To ease their burden, Chinese taxation authorities introduced a package of measures to cut taxes and administrative fees for them last year.<\/p>\n
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For example, the validity period of policies that allow small and micro businesses to delay paying income tax and that reduce and exempt added-value tax for small-scale taxpayers were prolonged until the end of 2020, effectively stabilizing the capital flow of small and micro businesses.<\/p>\n
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Under these policies, over 90 percent of small-scale taxpayers were exempted from added-value tax; those who still needed to pay added-value tax were charged at a rate of 1 percent, down from the former 3 percent; taxpayers in central China’s Hubei province, which was once hit hard by the epidemic, were all exempted from added-value tax.<\/p>\n
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Last year, a large amount of small and micro businesses benefited from these favorable tax policies.<\/p>\n
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Xiong Meigui, who runs an automobile\u00a0repair shop in Dexing, east China’s Jiangxi province, heard the news of reducing and exempting added-value tax for small-scale taxpayers when she was applying for invoice issuance at a tax service hall.<\/p>\n
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Thanks to the policy, Xiong enjoyed the 1 percent tax rate and paid merely 1,932 yuan for added-value tax of goods and services worth of over 190,000 yuan, over 3,000 yuan less than the tax payment she expected, according to Xiong.<\/p>\n
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In recent years, cutting taxes and administrative fees has been a focus in the fiscal and taxation field, said Zhu Qing, deputy head of the Chinese Tax Institute as well as a professor at the School of Finance, Renmin University of China.<\/p>\n
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China’s tax and administrative fee cuts hit a record high in 2020, Zhu noted, who believes that such taxation policies played a significant role in China’s steady GDP growth in 2020.<\/p>\n
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Small and micro enterprises are an important force in creating jobs and invigorating the national economy.<\/p>\n
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From 2016 to 2020, more than 90 percent of the newly established tax-related market entities in China were small and micro enterprises, with their number being close to 52 million.<\/p>\n
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Policies on reducing taxes and administrative fees have generated tangible dividends and enabled enterprises to put in more capital into production and operation, R&D, expanding investment and improving the welfare of employees.<\/p>\n
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“Thanks to the government’s efforts to cut taxes and administrative fees, we are able to allocate more money for scientific and technological innovation,” said Wang Zhiye, a manager with an electric machinery company in Pizhou, east China’s Jiangsu province, adding that the company initiated six R&D projects this year.<\/p>\n
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In the first half of 2020, the company gained nearly 500,000 yuan in cash flow directly from reduction in and exemption from its social security contributions, according to Wang.<\/p>\n
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Seizing the opportunity, the company launched a new casting production line worth over seven million yuan, and then received a huge number of orders for cast iron junction boxes and casting shells and secured sales revenue of more than 20 million yuan.<\/p>\n
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Last year, tax authorities at all levels in China continued to optimize technologies and services in an all-round way, and vigorously implemented “contactless” tax services.<\/p>\n
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They explored “contactless” tax payment channels including online platform, app, mailing, faxing and e-mail, greatly simplifying the tax procedures and lessening the burden of tax declaration for small and micro enterprises.<\/p>\n
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This year, the national taxation system will further consolidate the results of tax and fee reduction, and implement newly issued favorable tax policies, according to a national tax work conference held recently.<\/p>\n
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