Deputies from Shanghai welcome new tax initiatives

Shanghai deputies to the 13th National People's Congress (NPC) have given positive feedback on the new tax refund and cut measures announced by Premier Li Keqiang on Saturday.

Policies that support manufacturing, micro and small enterprises and self-employed individuals will be extended this year with tax refunds and cuts expected to total 2.5 trillion yuan (US$395 billion), Li said.

He made the remarks in a government work report he delivered to the deputies at the opening of the Fifth Session of the 13th NPC.

This is a big step from 2021 considering that the tax and fee cuts for last year amounted to more than 1 trillion yuan.

Zhu Jiandi, managing partner and chairman of BDO China, an accounting firm, noted that 1.5 out of the 2.5 trillion will be received by market entities in the form of value-added tax credit refunds, the largest annual scale of such refunds in China ever.

Small and micro-sized enterprises will be prioritized, and by the end of June, all of those enterprises will be sure to have received their VAT credit refunds, according to the government.

"This will significantly boost the cash flows of enterprises and enable them to enhance their operation," Zhu said. "It also shows that the central government has solid tax revenues."

Deputy Tang Liang, CEO of Ossen Group, a Shanghai-based manufacturer of bridge cables, and vice president of Shanghai Federation of Industry and Commerce, was excited about the new tax cuts for small and medium-sized enterprises working in science and technology.

The government work report proposed to increase the additional pre-tax deduction from 75 percent to 100 percent for those enterprises on R&D expenses.

Last year, the same policy was for the first time introduced for manufacturing enterprises, with the total tax cuts on R&D expenses for the first three quarters of last year amounting to 333.3 billion yuan, according to the government work report this year.

"The new policy represents a huge capital boost for companies with R&D activities and will encourage them to more actively go for innovation," Tang said. "It's great and timely news for the real economy."