Full transcript of policy briefing of the State Council on Feb 27, 2015

China Daily:

My question goes to Mr Shi. Does the Ministry of Finance have a comprehensive plan that includes different policies to help small-and-micro sized enterprises grow?

Shi Yaobin:

It’s a very good question. As I just mentioned, according to the National Bureau of Statistics, there are about 10 million small and-micro sized enterprises in China. These enterprises account for a large proportion of enterprises in the country but they are very vulnerable to risks. If we want to make them into “fresh troops” for economic development, a large pool of jobs and an important source of innovation — roles that Premier Li Keqiang expects them to play — we must help them grow as fast as possible. As a result, we need to undertake various efforts to improve their ability to ward off risks. An important aspect is to reduce the burden of tax and fees imposed on them.

Shi Yaobin:

Finance and tax departments of the government have been focusing on the issue and have adopted many measures to lower their tax burden.

First, we have readjusted policies four times and included more and more small and micro-sized enterprises into the list of those who only have half of their annual income taxable.

We lifted the threshold for levying value-added tax and business tax last year, from 20,000 yuan to 30,000 yuan of sales per month. We also implemented policies to make tax-deductible loan loss reserves for banks that are established within certain proportions for loans offered to agricultural businesses, and lifted business tax imposed on the interest banks get from loans they offer to farmers.

These different policies covered direct taxes, such as enterprises’ income tax, and indirect taxes, such as value-added tax and business tax. And these tax-reduction policies cover not only small and micro-sized enterprises but also banks that offer services to them.

Shi Yaobin:

Second, in recent years, the Ministry of Finance has done lots of work to reduce fees imposed on small and micro-sized enterprises. First, we lifted 42 categories of fees the government charged them. Second, small and micro-enterprises whose monthly sales are no more than 30,000 yuan no longer have to pay for four kinds of fees the government charges to support infrastructure and other public services. Third, in three years since they got registered with the industrial and commercial authorities, these enterprises that contain no more than 20 members of staff workers don’t have to contribute to the government’s fund supporting employment of disabled people.

A rough calculation shows that in 2014, the government lifted more than 40 billion yuan from the burden on enterprises and individuals by canceling fees it used to charge them.

Shi Yaobin:

Third, we set aside money from public finances to support the development of small and micro-enterprises. In 2014, the public finances set aside 11.6 billion yuan to make it easier for these enterprises to get loans, enhance services offered to them and encourage them to innovate.

In 2015, the public finances will still set aside 11.6 billion yuan to support them, even though the growth of fiscal revenue keeps slowing and the pressures for spending are as much as last year.

Besides, we are studying setting up a special fund to support the development of these enterprises, and will continue to design favorable policies to reduce tax and fees imposed on them and improve their ability to ward off risks.

We will continue to tap into public finances to help them become more active and more innovative. The finance and tax departments and other relevant departments under the State Council will study these potential policies actively and come up with more good ways to support the enterprises.

Thank you.