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Report: Companies to see more tax savings

By Wang Yanfei | China Daily | Updated: 2017-03-06 07:57

Taxation of companies will be further reduced this year as China aims to maintain the same budget deficit as in 2016, Premier Li Keqiang said as he delivered the Government Work Report on Sunday.

The target for the budget deficit has again been set at 3 percent, he said, providing room to cut the corporate tax burden by about 350 billion yuan ($50.75 billion) and cut local government fees by about 200 billion yuan.

The premier also pledged to improve the taxation system by expanding coverage of preferential policies and reducing the number of tax bands from four to three, making the value-added tax system more efficient and transparent.

"We have to make sure that market players can feel the tax cuts," Li said, adding that the central government should take the lead in reducing unnecessary government spending and inefficient projects.

VAT reform, which began in 2012 and has seen business tax replaced with VAT, resulted in companies making total tax savings of 570 billion yuan last year, well above the 500 billion yuan target, according to data from the report.

The reform was rolled out in the last four sectors - finance, construction, property and consumer services - in May, which means it is now being implemented nationwide in all industries.

Ma Xingrui, the governor of Guangdong province, said improving the VAT system will help boost nonfinancial sectors on a large scale.

Corporate tax rates came under the spotlight late last year when Cao Dewang, founder and chairman of Fuyao Glass Industry Group, complained that the tax rate in China is too high com-pared with the United States.

Cao, also a deputy to the National People's Congress, said on Friday that he appreciated the government's attention to lowering corporate tax. He said he believes the tax burden will be reduced, although it could take a while to see a major improvement.

Data from the State Administration of Taxation showed that only 1.5 percent of corporate taxpayers faced higher taxes after implementation of the VAT reform.

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