China Spares No Effort in the “BurdenReduction” of Enterprises
Source:Futures Daily Publication Date: 2018-05-14
At the policy briefing held by the StateCouncil Information Office a few days ago, the relevant responsible persons ofthe Ministry of Finance, the State Administration of Taxation, the Bank ofChina Insurance Supervision and Management Committee and other units haveintroduced the work related to cost reduction. It is understood that China'stax cuts and fee reductions are constantly increasing, the business environmentis more relaxed, and financial services are more accessible. Experts believethat these “burden reduction” measures are ultimately aimed at reducing theoperating costs of enterprises, thereby realizing the improvement of corporateprofitability and innovation momentum, and laying a more solid internalfoundation for the Chinese economy to achieve higher quality development.
TaxReduction is Constantly Increasing
Raising the threshold for value-added tax,reducing the fees for small and micro enterprises, exempting the employmentguarantee fee for disabled persons in small and micro enterprises, and expandingthe scope of half of the income tax on small and micro enterprises… theseone-to-one real tax reduction measures are being successively launchednowadays, lessening the burden of Chinese enterprises and making them moreenergetic.
For example, the three newest measures fromMay 1st this year: the “Value Added Tax rate for manufacturing andother industries will be reduced from 17% to 16%.” “The VAT rate for goods suchas transportation, construction, basic telecommunications services andagricultural products will be down to 10% from 11%" "Upgrading theannual sales standard of small-scale taxpayers from industrial enterprises andcommercial enterprises from 500,000 yuan and 800,000 yuan to 5 millionyuan", have brought benefits to many companies.
Dalian Second Transformer Group Co., Ltd.is one of the most well-known enterprises in China's transformer industry. YuJian, the company's financial executive, said that after May 1st, theapplicable tax rate of enterprises will be reduced, and the tax burden andoperating costs will also decrease. According to the cost rate of last year,the company expects to reduce taxes by 1.75 million yuan, which not only increasesthe operating profit of the company, but also makes the flow of funds smoother.
"The large number of small and microenterprises in China has a natural advantage in absorbing employment, but italso has a natural disadvantage of small size and weak anti-risk ability. Itrequires the government to give more policy support in taxation and other areas."When speaking about the latest seven tax incentives, the Vice Minister ofFinance, Cheng Lihua, expressed that China has roughly formed a policy supportsystem involving more taxes, more preferential links, and more preferentialpolicies in recent years. The latest tax reduction measures increased efforts, specifieddirection, and further enriched and improved China's tax policy system. It willprovide better guarantee of the high-quality development of China's economy.
AnotherStep of Inclusive Finance
For enterprises, especially small and microenterprises, “funding difficulties and expensive financing” have always been aproblem of cost reduction. Today, the development of China’s inclusive financeis alleviating corporate financing costs. According to Wang Zhaoxing, vicechairman of the Bank of China Insurance Supervision and Management Committee,as of the end of the first quarter of 2018, the national small and microenterprise loan balance has reached 31.76 trillion yuan, an increase of 0.96trillion yuan in the first quarter of this year. The number of small and microenterprise loans has reached 15.45 million households, and the balance ofagriculture-related loans is also close to 32 trillion yuan, an increase of 1.1trillion yuan compared to the beginning of the year.
Wang Zhaoxing said that for small and microenterprise loans, banks are forbidden to collect commitment fees and fundmanagement fees and should strictly limit the collection of financial advisoryfees and consulting fees. The loan interest rate is generally controlled withina reasonable range, which is stable and declining. In the banking industry, theannual fee reduction was 44 billion yuan.
At the same time, the application of newtechnologies by large banks has also made Inclusive Finance “stronger”. Forexample, China Construction Bank, considering the “lack of information” and“lack of credit” of inclusive financial customers, uses model design, dataaccumulation and system development to create a new model of “digitalized,intelligent and networked” services that is different from traditional bankingservices. It created the first small and micro enterprise scorecard, breakingthrough the information and credit “bottleneck” in the financing service ofsmall and micro enterprises; it relied on the “new generation” advantage,realizing the integration of data and information first with accurate“portrait”; it also developed the first “small-micro fast loan” process withthe whole financing procedure online… As of the end of April 2018, the bank hasprovided more than 280 billion yuan in loan support to 280,000 small and microenterprises.
Corporatevitality continues to be released
Yang Song, director of the Institute ofEconomics of the Beijing Academy of Social Sciences, pointed out in aninterview with this reporter that the current Chinese economy is in atransitional stage of steading the speed of growth and improving quality, andit is undoubtedly very important to reduce the cost of production and operationand of financing to stimulate economic innovation and vitality.
“From a fiscal point of view, tax and feereduction and business environment optimization can stimulate the originalvitality of the market more than the previous fiscal stimulus; from a financialpoint of view, China's vigorous development of inclusive finance is aimed atthe long-term problem of 'de-reality' in the financial sector, allowing moreentities to obtain financial support. All in all, China spares no effort to 'reducethe burden' for enterprises, in order to continue to release the vitality ofbusiness operations.” Yang Song said.
Liu Qingfeng, chairman of Keda Xunfei, saidthat in 2017, Keda Xunfei enjoyed nearly RMB 48.75 million in various taxreductions and exemptions. Both technology upgrades and talent cultivationrequire a large amount of capital investment. The reduction measures haveboosted the R&D investment of enterprises, which has promoted thedevelopment of scientific research teams and strongly supported thetransformation from application of scientific and technological achievements.
Statistics from the National Bureau ofStatistics show that from January to March 2018, the profits of industrialenterprises above designated size increased by 11.6% year-on-year, and theprofit structure was optimized. Among them, the cost per 100 yuan of mainbusiness income of industrial enterprises above designated size was 92.61 yuan,down 0.13 yuan year-on-year; the asset-liability ratio of industrialenterprises above designated size was 56.4%, down 0.8 percentage pointsyear-on-year, and the company's efficiency continued to improve. (Reporter:Wang Junling)
