Small, Micro Enterprises to Enjoy VAT and BT Exemptions

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Jul. 31 – At last week’s State Council meeting held by Chinese Prime Minister Li Keqiang, it was decided that all eligible small and micro-sized enterprises in the country will be temporarily exempted from value added tax (VAT) and business tax (BT) starting August 1, 2013. The policy is only temporary for now, but the State Council has announced that a similar long-term policy is currently being worked on.

This temporary policy basically allows eligible small and micro-sized enterprises to now enjoy the same tax policies as sole proprietorships, and the State Council has estimated that the new policy will benefit more than 6 million small and micro-sized enterprises with regards to employment and revenues. Specifically, it calls for small-scale VAT taxpayers and BT taxpayers (i.e., ones that achieve less than RMB20,000 in total monthly sales) to be exempted from VAT and BT beginning August 1.

During the meeting, the government also agreed to further simplify China’s customs clearance procedures (such as by temporarily exempting statutory inspection fees for exported goods), a move that hints that additional relevant schemes can be expected soon to further improve China’s trade situation.

Furthermore, the State Council announced plans to boost the import of goods due to what China’s Customs Spokesman Zheng Yuesheng described, in reference to the significant decline to the country’s June 2013 trade figures, as a “grim” situation.

It was also pointed out at the meeting that the large number of small and micro enterprises in China – most of which are private enterprises – are likely to play an important role in boosting the country’s economic development and also bolstering employment rates.

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