A State Council meeting presided over by Premier Li Keqiang Wednesday decided that some of the country's small and micro-sized enterprises will be temporarily exempt from paying value-added tax and business tax starting from August 1, in a bid to alleviate the tax burden on small businesses amid a cooling economy。
Enterprises with monthly sales revenue of no more than 20,000 yuan ($3,258) will be qualified for the tax exemption, said a statement released by the State Council, the country's cabinet。
The statement did not specify when the policy will expire, but said the cabinet is working on long-term mechanisms to benefit the country's small businesses, which number more than 6 million。
"This is definitely good news for micro and small businesses, which consist of the primary chunk of the country's private sector," Zhou Dewen, vice president of the China Association of Small and Medium Enterprises, told the Global Times Wednesday。
The copious amount of small businesses in the country have long been subject to the same levels of taxes as their bigger counterparts, Zhou said, noting that small businesses especially have taken a hit amid the slowing economic growth。
The country's GDP growth slowed to 7.5 percent in the second quarter, according to official data, and a preliminary survey by HSBC showed Wednesday that smaller manufacturers have been hardest hit。
The flash HSBC purchasing managers' index, which mainly covers smaller businesses, fell to 47.7 in July, the lowest in 11 months, the bank announced Wednesday。
A reading above 50 indicates expansion in the manufacturing sector, while a reading below 50 points to contraction。
In addition to the preferential tax policy, Zhou called for more moves from the government to help "pull the private sector out of the mire."
Small businesses have met with difficulty in getting financing as the government has tightened its grip on liquidity, he said, noting that more financial support is needed, as well as reductions in various administrative fees。
