China Gives Its SMEs A Mega Tax Break

In recent months, China has launched new incentives aimed at supporting its small- and medium-sized enterprises. Most recently, however, local SMEs are celebrating over a recent decision by officials that removes policies that hit small business owners especially hard.

In reports released Thursday (Jun 4), the China Center for Promotion of SME Development under the Ministry of Industry and Information Technology applauded new measures by the government that remove taxes and fees imposed upon small businesses. According to officials, the removal of these fines is likely to save companies large and small $23 billion every year.

A report published rom the China Center for Promotion of SME Development found that doing away from these fines, largely considered unreasonable and unnecessary, will also boost transparency and efficiency among taxation efforts by the government. The conclusions follow finalizations by central and local governments of the fines that will still apply to SMEs in the nation.

Despite a great improvement in SME finances among the expected benefits of the revised regulations, the report suggests that more could still be done to improve the economic position of small business owners in China, and suggested that unfair fees are still collected from Chinese businesses through shady methods.

“For example,” said the China Center’s director Qin Zhihui, “banking fees are not transparent enough. Some banks charge unreasonable guarantee and consulting fees in disguised forms when making loans, which adds to funding costs of companies.”

As such, officials at the China Center are reportedly advising the government to even further progress its efforts to remove such unnecessary fines and taxations.

China has made public efforts to boost the economic standing of its small businesses as of late, including an order by the China Banking Regulatory Commission that called on major financial institutions to increase their lending to SME customers. Part of that order, reports said, including a demand that banks more sensitively respond to small businesses’ repayment efforts and hold off on cutting off their lines of credit.