August 2023 / China

The General Administration of Customs on Wednesday announced it has rolled out 23 reform measures to support the comprehensive bonded zones (CBZs).

The move aims to provide more policy support for the high-quality development of the CBZs, expand their functions and streamline their operational procedures.

The new measures will optimize inspection and quarantine operations, launch the classified and graded management of checkpoints, and upgrade key commodity management.

CBZs are special commercial zones that enjoy favorable taxation policies managed by customs authorities.

Special customs supervision areas are key platforms for opening-up, especially when it comes to expanding trade and attracting investment.

A total of 171 special customs supervision areas have been built in China, including 161 CBZs, according to customs authorities.

Since 2014, China has witnessed rapid development in rural e-commerce, driven by the country's increased support for this sector, according to the Ministry of Commerce.

By the end of last year, China's rural internet users exceeded 300 million, Li Gang, a ministry official, told a press conference on Tuesday.

The country's online retail sales in rural areas surged from 180 billion yuan (about 25.08 billion U.S. dollars) in 2014 to 2.17 trillion yuan in 2022, Li added.

E-commerce has brought farmers closer to the market and promoted entrepreneurship and employment in rural areas.

In 2022, online retail sales of agricultural products in China reached 531.38 billion yuan, up 9.2 percent year on year. By the end of last year, the number of rural online businesses exceeded 17.3 million, Li said.

He added that the ministry will focus on comprehensively promoting rural revitalization, promoting rural e-commerce as an important part of county-level commerce, and advancing the high-quality development of rural e-commerce in the next step.

The Chinese government on Monday released a three-year action plan with the goal of strengthening the nation's county-level commerce system further. The action plan seeks to promote the integrated development of urban and rural areas of China and rejuvenate the rural regions of the country.

China's retail sales of consumer goods, a major indicator of the country's consumption strength, maintained stable growth in July, official data showed Tuesday.

The retail sales of consumer goods increased by 2.5 percent year on year last month to nearly 3.68 trillion yuan (about 512.22 billion U.S. dollars), according to the National Bureau of Statistics (NBS). In the January-July period, the figure increased 7.3 percent.

The consumer market continued to recover and service consumption grew rapidly, the NBS said in a statement.

"Domestic demand kept growing," NBS spokesperson Fu Linghui told a press conference Tuesday. "The service consumption, such as summer vacation tourism, picked up markedly, offering significant support for expanding consumption."

In July, the catering sector reported a revenue increase of 15.8 percent from a year earlier. In the first seven months, online retail sales gained 12.5 percent and service sales surged 20.3 percent.

The Chinese economy will maintain its stable and positive trend in the second half (H2) of this year, following a sustained recovery in the January-June period, an official said Friday.

During a press conference, Yuan Da, from the National Development and Reform Commission, highlighted positive changes in various economic indicators for July such as faster growth in power generation, improving market expectations and a two-month rise in the manufacturing purchasing managers' index.

The government's policy mix that continues to take effect will promote economic improvements, according to Yuan.

China has taken important steps to extend and strengthen favorable policies for enterprises this year. These measures range from providing tax breaks for small firms to the exemption of the purchase tax for new energy vehicles, thus creating a stable policy environment and boosting the confidence of businesses.

A string of new measures were also rolled out, including financing support for tech firms, incentives for automobile and electronics consumption, and measures to bolster the private economy.

In response to new economic changes in the second quarter, another batch of measures is being put into force in a timely manner to offer strong policy support for the continued economic recovery, Yuan said.

These measures encompass bringing down interest rates, stimulating consumption, renovating urban villages in cities and expanding the issuance of real estate investment trust products in the infrastructure sector, according to Yuan

The Ministry of Finance and the State Taxation Administration jointly released on August 1, 2023 the Announcement on the Policy of Reducing and Exempting the VAT for Small-scale VAT Taxpayers (No.19 (2023) Document), which details on the extension of the preferential tax policy.

Specifically, small-scale VAT taxpayers with monthly sales of less than 100,000 yuan (inclusive) would be exempted from the VAT, their taxable sales income would be taxed at a reduced rate of 1% instead of 3%, and the prepaying VAT items applicable to a 3% rate would be taxed at a reduced rate of 1%.

The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") jointly released on August 2, 2023 the Announcement of Tax Policies Supporting Micro and Small Businesses to Finance (No.13 (2023) Document), which extends the relevant policies to December 31, 2027.

As a follow-up policy of the MOF and STA No.77 (2017) document, the Announcement continues the related preferential policies, including exempting the value-added tax (VAT) on interest income earned by financial institutions from granting small loans to micro and small businesses and self-employed households, and exempting the stamp duty on the loan contracts signed between financial institutions and micro and small businesses.

The two regulators issued on the same day the Announcement on the Exemption of VAT on Interest Income of Financial Institutions from Granting Loans to Micro and Small Businesses (No.16 (2023) Document), and the Announcement on Continuing the VAT Policy for Provision of Financing Guarantee to Farmers, Micro and Small Businesses and Self-employed Households (No.18 (2023) Document), which extend the policy of exempting VAT on interest income earned by financial institutions from granting small loans to micro and small businesses and self-employed households as stipulated in the MOF and STA No.91 (2018) document and the policy of exempting VAT on income earned from provision of financing guarantee as stipulated in Article 6 of the MOF and STA No.90 (2017) document to December 31, 2023, respectively.

The Ministry of Finance ("MOF") and the State Taxation Administration ("STA") jointly released on August 2, 2023 the Announcement of the Tax Policies to Further Support the Growth of Small Businesses and Self-employed Households, as well as the supporting documents regarding tax collection and administration. The relevant policies as mentioned in the documents would be implemented during the period from January 1, 2023 to December 31, 2027.

It is clarified in the Announcement that:

(1) the annual taxable income of self-employed households on which the individual income tax is halved, as provided in the MOF and STA No.6 (2023) Announcement, would be raised to no more than 2 million yuan from no more than 1 million yuan;

(2) the "six local taxes and two fees" levied on small-scale VAT taxpayers, small low-profit enterprises and self-employed households for no more than 50% of their taxable income according to the MOF and STA No.10 (2022) Announcement would be fixed at halved; and

(3) the policy of levying corporate income tax at a reduced percentage of 25% as per the tax rate of 20% (ultimate CIT rate at 5%) for small micro-profit businesses, as stipulated in the MOF and STA No.13 (2022) Announcement and the MOF and STA No.6 (2023) Announcement, would be extended to December 31, 2027.