A news conference was held by officials from the Ministry of Finance on Thursday, detailing the reforms of the country's taxation system and new measures to address issues in the finance sector.
China's Minister of Finance Liu Kun (C), and vice ministers Cheng Lihua (2nd R) and Liu Wei (2nd L) attend a press conference on the country's fiscal and tax reforms and fiscal work for the second session of the 13th National People's Congress in Beijing, capital of China, March 7, 2019. [Photo: Xinhua]
Small and medium-sized enterprises (SMEs) are a major force in China's national economic and social development, said Liu Wei, the vice minister of finance. He said the central government will improve the business environment for these enterprises by introducing new measures in four key areas: reducing the tax burden, improving access to credit, directing government procurement to SMEs, and funding to support innovation.
1. Reducing the tax burden
The government has released a number of policies that aim to reduce the tax burden on SMEs. It has also broadened the definition for what constitutes an SME: The top bracket for the company's total assets has risen from 30 million to 50 million yuan (4.5 to 7.5 million U.S. dollars), the workforce is up from 100 to 300 employees, and the amount of taxable income from 1 million to 3 million yuan (150,000 to 450,000 U.S. dollars). As a result of these changes, 18 million more enterprises can enjoy the new tax cuts for SMEs.
2. Improving access to credit
The government will further broaden the availability of financing for SMEs. The government has set aside 10 billion yuan (1.49 billion U.S. dollars) for loans to people wanting to start a business, and the maximum amount someone can borrow to start a business has risen from 100,000 to 150,000 yuan (14,900 to 22,350 U.S. dollars) for individuals and from two million to three million yuan (300,000 to 450,000 U.S. dollars) for enterprise. The government is also providing funding to local governments to spend on supporting their local SMEs.
3. Directing government procurement to SMEs
Government procurement policy is to play an important role in supporting the development of SMEs. At the news conference on Thursday, the finance ministry said that at least 30 percent of government procurement should be directed to SMEs.
4. Funding to support innovation
The government will continue to provide funding programs to support upgrades at SMEs, and provide funding to support entrepreneurship and innovation initiatives that help enterprises to enhance their degree of specialization. It will also provide a service platform to support the development of small enterprises.