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5 White Paper on the Business Environment in China
polluting, high energy consumption or domestically sourced 2. Optimizing the structure of SMEs;
goods that are scarce,” according to Deloitte, who further 3. Boosting development of the “new, distinctive,
noted that “compared to the 2007 reduction in the export
VAT refund, this round of changes is relatively prudent;”21 specialized and sophisticated” industries and the
nevertheless, a span of 22 days between rst publication and industrial conglomerates;
the new rule becoming e ective is rather slimmer than we 4. Upgrading enterprise management level;
suspect most companies involved in the trade would prefer. 5. Refining the service system of SMEs.23
Meanwhile, tari s on certain imports of high-tech Tax Cuts for Small Businesses
goods including, according to Xinhua, “core electronics, Less than two weeks after that report, Xinhua cited the
high-end universal chips, basic software, integrated circuit-
manufacturing equipment, new generation wireless mobile Ministry of Finance as announcing a series of tax relief policies
communication networks, and new drugs for prevention to “bene t the nation’s crisis-hit small and micro-sized rms—
and treatment of some infectious diseases such as AIDS and including street vendors—and also help curb in ation,”
hepatitis,” were removed on the same day that the refund including raising the threshold for VAT and business taxes to
elimination occurred in order to “encourage research and 5,000 through 20,000 yuan as well as abolishing the stamp tax
development in the nation’ s major strategic products, core on loans from nancial institutions until October 31, 2014.24
technologies and major projects”.22
Small to medium size businesses bene ted further from
On June 30, 2014, China’s top leaders endorsed a program preferential tax policies issued later by the government.
of reform to the nation’s tax system, budgeting practices and According to a China Brie ng report by Dezan Shira &
Associates, “on April 8, the Ministry of Finance (MOF)
scal relations. While details have not yet been disclosed, it and the State Administration of Taxation (SAT) issued an
was stated, the World Bank reports, that “broad objectives ‘Announcement on Preferential Income Tax Policies for Small
for scal and tax reforms in the ird Plenum decisions are: and Low-Pro t Enterprises’. Based on the Announcement,
Public nance is the foundation and a critical pillar for state small and low-pro t enterprises with a taxable income not
governance. A scienti cally designed scal and tax regime is the exceeding RMB100,000 (US$16,130) should pay corporate
institution that guarantees resource allocation optimization, income tax at the rate of 20 percent on only 50 percent of
market uni cation, social equality, and long-lasting security their taxable income. e preferential policy is e ective from
and peace for a nation.” In the same World Bank report, January 1, 2014 to December 31, 2016.”26
Minister of Finance Lou Jiwei states that the deadline for
major reform tasks concerning the scal and tax system will
be completed by 2016, and that China aims to have a fully
developed modern scal system by 2020. e World Bank is
of the opinion that “this will not be minor amendments to
current policies; but rather will involve systemic restructuring
and institutional innovation”. e Finance Minister has stated
that “the years 2014 and 2015 will be vital in pushing forward
the reforms.”25
A Growth Plan for SMEs in the 12th Five-Year Plan
On September 22, 2011, a national “Growth Plan
for SMEs” was released to bolster a critical—and yet
underprivileged—part of the Mainland’s economy.
According to Xinhua, “SMEs contribute to 60 percent
of China’s industrial output and create 80 percent of the
country’s jobs” and yet have historically had fewer options for
support from the government than state-owned enterprises.
e report then somewhat obliquely enumerates ve points
from the 12th Five-Year Plan which aim to improve the
position of these small- and medium-sized enterprises:
1. Improving the capacity of establishing business and
create jobs;
192
polluting, high energy consumption or domestically sourced 2. Optimizing the structure of SMEs;
goods that are scarce,” according to Deloitte, who further 3. Boosting development of the “new, distinctive,
noted that “compared to the 2007 reduction in the export
VAT refund, this round of changes is relatively prudent;”21 specialized and sophisticated” industries and the
nevertheless, a span of 22 days between rst publication and industrial conglomerates;
the new rule becoming e ective is rather slimmer than we 4. Upgrading enterprise management level;
suspect most companies involved in the trade would prefer. 5. Refining the service system of SMEs.23
Meanwhile, tari s on certain imports of high-tech Tax Cuts for Small Businesses
goods including, according to Xinhua, “core electronics, Less than two weeks after that report, Xinhua cited the
high-end universal chips, basic software, integrated circuit-
manufacturing equipment, new generation wireless mobile Ministry of Finance as announcing a series of tax relief policies
communication networks, and new drugs for prevention to “bene t the nation’s crisis-hit small and micro-sized rms—
and treatment of some infectious diseases such as AIDS and including street vendors—and also help curb in ation,”
hepatitis,” were removed on the same day that the refund including raising the threshold for VAT and business taxes to
elimination occurred in order to “encourage research and 5,000 through 20,000 yuan as well as abolishing the stamp tax
development in the nation’ s major strategic products, core on loans from nancial institutions until October 31, 2014.24
technologies and major projects”.22
Small to medium size businesses bene ted further from
On June 30, 2014, China’s top leaders endorsed a program preferential tax policies issued later by the government.
of reform to the nation’s tax system, budgeting practices and According to a China Brie ng report by Dezan Shira &
Associates, “on April 8, the Ministry of Finance (MOF)
scal relations. While details have not yet been disclosed, it and the State Administration of Taxation (SAT) issued an
was stated, the World Bank reports, that “broad objectives ‘Announcement on Preferential Income Tax Policies for Small
for scal and tax reforms in the ird Plenum decisions are: and Low-Pro t Enterprises’. Based on the Announcement,
Public nance is the foundation and a critical pillar for state small and low-pro t enterprises with a taxable income not
governance. A scienti cally designed scal and tax regime is the exceeding RMB100,000 (US$16,130) should pay corporate
institution that guarantees resource allocation optimization, income tax at the rate of 20 percent on only 50 percent of
market uni cation, social equality, and long-lasting security their taxable income. e preferential policy is e ective from
and peace for a nation.” In the same World Bank report, January 1, 2014 to December 31, 2016.”26
Minister of Finance Lou Jiwei states that the deadline for
major reform tasks concerning the scal and tax system will
be completed by 2016, and that China aims to have a fully
developed modern scal system by 2020. e World Bank is
of the opinion that “this will not be minor amendments to
current policies; but rather will involve systemic restructuring
and institutional innovation”. e Finance Minister has stated
that “the years 2014 and 2015 will be vital in pushing forward
the reforms.”25
A Growth Plan for SMEs in the 12th Five-Year Plan
On September 22, 2011, a national “Growth Plan
for SMEs” was released to bolster a critical—and yet
underprivileged—part of the Mainland’s economy.
According to Xinhua, “SMEs contribute to 60 percent
of China’s industrial output and create 80 percent of the
country’s jobs” and yet have historically had fewer options for
support from the government than state-owned enterprises.
e report then somewhat obliquely enumerates ve points
from the 12th Five-Year Plan which aim to improve the
position of these small- and medium-sized enterprises:
1. Improving the capacity of establishing business and
create jobs;
192
