December 21 2021

State Council Decides to Weight Tax and Fee Cut Policy toward Manufacturing

Source: Announcement by State Council

Premier Li Keqiang chaired an executive meeting of the State Council on December 15, 2021, stressing that a market-oriented approach would be further applied to increase financial support to micro, small, and medium enterprises and policy support for the manufacturing industry would be enhanced.

It is decided at the meeting that support would be increased to help manufacturing firms to overcome difficulties and grow, the tax and fee cut policies would be weighted toward the manufacturing industry, the policies of granting an extra tax deduction on enterprises' R&D costs and refunding and rebating the VAT would be further implemented to support enterprises to conduct innovation in science and technology and transform and update traditional industries. It is also decided to change the policy of allowing micro and small enterprises to defer principal and interest repayments on inclusive-finance loans to the policy of supporting them with inclusive-finance loans. From 2022 to the end of June, 2023, the central bank will provide the funds at 1% of the incremental balance for the inclusive-finance loans granted by local corporate banks to small and micro enterprises and self-employed individuals.

We foresee more tax benefits that will be announced in 2022.