Tax officials (right, second from left) answer questions from employees at a factory in Ganzhou, Jiangxi province, in April. (HU JIANGTAO/FOR CHINA DAILY)
Amid headwinds, multiple government units line up to provide business support
The concerted efforts of several authorities to support refunds of value added tax (VAT) credits to businesses will play a vital role for small businesses in the country facing strong headwinds, and should help them through difficult times, officials and experts said.
Wang Daoshu, deputy commissioner of the State Tax Administration, told a press conference on Tuesday that in April, some 801.5 billion yuan ($119.2 billion) of VAT credits newly increased had been refunded to taxpayers.
Combined with refunds generated by previous tax refund policies in the first quarter, the total amount of tax refunds from January to April reached 924.8 billion yuan. Their role in helping businesses and easing commercial burdens had an initial impact.
It was noted in this year’s Government Work Report in March that this year tax and fee reductions will continue to work as an important measure to help businesses and support the economy. He said VAT credit refunds will reach 1.5 trillion yuan this year, all of which will go directly to businesses.
Jia Ronge, an official with the State Tax Administration, said on Tuesday that small and micro businesses have been the main recipients and beneficiaries of this round of VAT credit refunds.
“Small businesses are numerous and cover large sectors, and are also the main job creators in the country. They are the main engine of growth and an important source of innovation,” he said. “Yet they also tend to be vulnerable to risk. We expect the tax refunds to help them address issues in a timely manner in the context of the current liquidity difficulties and overcome them in these difficult times. “
Among all recipients of tax refunds in April, the number of small and micro businesses stood at 1.395 million, or 96.1 percent of the total, according to the news briefing.
It was announced at Tuesday’s briefing that significant tax cuts and refunds will be provided this year, a coordination mechanism that covers the Ministry of Finance, the State Tax Administration and the People’s Bank of China, the central bank, was established under the approval of the State Council, the Cabinet of the nation.
Dong Huajie, director of the PBOC’s State Treasury Office, said the central bank had made special efforts to support the tax refund movement. Since the beginning of the year, the PBOC has provided 800 billion yuan of excess profits to central finance, and the total amount of profits returned by the PBOC will exceed 1.1 trillion yuan for this year.
“Handing over the 800 billion yuan of PBOC profits is equivalent to cutting banks’ reserve requirement ratio by 0.4 percentage points. Incorporated with other monetary policy measures, this will help keep liquidity at an adequate level. and reasonable,” he said.
He added that such funding will help establish a solid funding base for tax refunds, as it will directly build fiscal capacity and thus better energize market players.
He Daixin, deputy director of the financial research office of the National Academy of Economic Strategy of the Chinese Academy of Social Sciences, said the excess profits handed over by the central bank are of crucial importance this year. He said the move will directly strengthen central fiscal capacity, increase effective fiscal spending within the budget, and thus contribute to stable growth in particular.