Experts: More tax, fee cuts key to small biz future

China cut about 1.1 trillion yuan ($174.02 billion) worth of taxes and fees in 2021 and will scale up tax and fee cuts for smaller businesses and manufacturers this year, the top tax authority said on Wednesday.

Experts said the nation's continuous efforts in tax cuts have been effective and helped vitalize market players, alleviated corporate cost burdens and facilitated economic restructuring.

The 1.1 trillion yuan tax and fee cuts last year have lessened tax burdens on market players, with the country's tax revenue-to-GDP ratio dropping to 15.1 percent, said Wang Daoshu, deputy head of the State Taxation Administration.

The reading was down by 0.1 percentage point from 2020 and 3 percentage points from 2015, Wang said at a news conference on Wednesday.

Looking ahead, China has mapped out a series of tax and fee cuts for this year with "greater focus on amplifying support" for micro-, small and medium-sized companies, self-employed businesses and the manufacturing sector, Wang said.

"The taxation system will spare no effort in putting in place tax and fee policies in favor of companies and individuals."

Last year's tax and fee reductions, Wang said, were mainly attributable to tax cuts for smaller businesses, tax deductions of research and development expenditures, value-added tax policies in favor of manufacturers and reduced social insurance contributions by employers.

Also, the country delayed tax payments of 216.2 billion yuan for micro-, small and medium-sized manufacturers last year. Up to 27.1 billion yuan in taxes on coal-fired power plants and heating companies were cut, rebated or delayed during the same period, STA data showed.

Raymond Zhu, deputy president of CPA Australia's East and Central China Committee, said tax and fee cuts have helped companies tide over difficulties and promoted economic upgrades last year.

"The impact of tax and fee cuts has been quite significant," Zhu said, citing that favorable value-added tax policies have lessened the cash flow burden on a wide range of companies, while targeted tax supports in areas like small business and research and development have encouraged the development of key sectors.

Zhu said he expects tax and fee reductions this year to continue featuring targeted support for struggling market players and sectors that are in line with China's economic upgrades.

Official data showed export tax rebates worth 1.67 trillion yuan were offered to foreign trade enterprises last year, helping ease cost burdens brought by rising shipping costs.

Meanwhile, the efficiency in granting export tax rebates has been lifted by 30 percent, thanks to streamlined procedures. The STA also shortened the average time needed to give export tax rebates to within seven workdays in ordinary cases, said Huang Yun, director of the administration's general office.

This year, the administration plans to roll out more measures to facilitate export tax rebates and support the development of cross-border e-commerce and other emerging forms of foreign trade, Huang said.