What’s new: China has extended some tax and fee relief policies for certain industries and small businesses to strengthen confidence in the economy, according to the State Council, the country’s cabinet.
The extensions are expected to reduce the amount of taxes and fees levied on businesses by more than 480 billion yuan ($70 billion) a year while they remain in effect, a readout from the State Council executive meeting on Friday shows. The extended policies can reduce the costs of businesses in certain areas such as research and development.
The length of the extensions varies. According to the readout, some policies will be extended to the end of this year, some to the end of 2024, some to the end of 2027, and some indefinitely.
The extensions are in line with the government work report delivered to the country’s top legislature early March, which said that some necessary tax and fee cut measures could be extended.
The background: In 2022, as waves of Covid outbreaks and strict containment measures disrupted business around China, the central government rolled out a huge tax and fee relief package that brought the total amount of relief to more than 4.2 trillion yuan, according to official data.
Economists have said that the focus of China’s fiscal policy this year will switch from tax and fee relief to investment, which could allow the government to get a bigger bang for its fiscal buck.
Read more Analysis: Why China’s 2023 Fiscal Policy May Be Less Expansionary Than It Seems
Contact reporter Zhang Yukun (yukunzhang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
Get our weekly free Must-Read newsletter.
