China's recent tax reduction move will boost the growth of small and micro-businesses and encourage stronger technological innovation, a senior official said.
Cheng Lihua, vice-minister of finance, said at a news briefing at the State Council Information Office on Thursday that China will implement seven tax-cut measures to boost the growth of small and micro-businesses as well as their ability to innovate. These measures are expected to help cut taxes by another 60 billion yuan (.5 billion).
Cheng said the new tax cut measures are designed particularly for small and micro-profit businesses, mainly to ensure employment and encourage technological innovation.
"China has a large number of small and micro-businesses, and this helps create a large number of jobs in China," she said. "Yet such businesses also have clear disadvantages, such as being vulnerable to risks. This requires the government to give them more policy support, especially tax incentives, to help them grow steadily."
Cheng said these measures will encourage businesses to invest more in research, both in China and overseas, and in employee training.
"So far, China has managed to build a strong and comprehensive tax system for small and micro-businesses, and these new policies, giving more tailored support for these businesses, will help tax incentives to be more stable with better continuity," she said.
For example, she said, tax incentives for business startups and angel investment, which have been piloted in eight regions, will now be applied across the country. This will help broaden the channel for small and micro-businesses to expand their financing channel from the start.
At an executive meeting on April 25 of the State Council, China's Cabinet, it was decided that financing costs for small and micro-businesses will be reduced substantially.
Wang Zhaoxing, deputy head of the newly merged banking and insurance regulatory commission, said at the briefing that the commission is working with several ministries to ensure inclusive financing will cover services offered by financial institutions to micro-businesses, farmers, those living on a low income in urban areas and people in similar circumstances.
Financial innovation is on the way to cut redundant costs when small and micro-businesses apply and receive loans and to help establish better credit for small businesses by using more comprehensive data and information, he said.
The growth rate of loans to small and micro-businesses should not fall under that of general loans, and this will be a part of the evaluation index to commercial banks, Wang said.