Tax cuts health tonic for small businesses

The National Development and Reform Commission recently issued a series of policies to reduce the costs of enterprises and help market entities overcome their difficulties.

The move attracting the most attention is the one about the reasonable reduction in fees and taxes, which is essential for enterprises' further development. In 2020 alone, the authorities introduced 28 policies for cutting taxes and fees worth about 2.6 trillion yuan ($403.8 billion).

Thanks to these policies, many small and medium-sized enterprises have been able to overcome the worst impacts of the novel coronavirus epidemic. The domestic economy has been recovering, but the recovery is still lopsided and, as a result, domestic enterprises, especially SMEs, need further support.

It is therefore necessary to introduce macro-policies, including tax cuts, which are continuous so as to reduce the burden on the SMEs. The total volume of tax cuts is expected to exceed 550 billion yuan, which shows the central government's firm determination to further help market players.

A few things deserve the authorities' attention in order to make the policies more effective. First, the procedure of applying for tax and fee cuts should be simplified, so that enterprises do not waste energy and other resources on it.

Second, local governments and departments must be properly regulated so that none dares to dilute the policies. Allegedly, some local governments were earlier collecting higher fees from enterprises under various heads to make up for their revenue shortfall. Higher authorities must stop them from doing so.

Third, the domestic economic recovery needs a firmer basis and no one can tell what new problems or challenges might arise. It is necessary to properly analyze tax-cut policies before implementing them, and make timely adjustments if necessary, so that the problems of the enterprises are addressed.

That will create more jobs and help the market and economy prosper.

Source from State taxation administration of the P.R.C.
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