China Government Arrange Key Tasks for Effective Work on Cost Reduction in 2020

Wednesday, 05 August 2020 11:17

Ministry of Industry and Information Technology, Ministry of Finance, the People’s Bank of China and National Development and Reform Commission, have recently issued the Circular on Working Effectively on Key Work on Cost Reduction in 2020 (the "Circular").

The Circular makes arrangements in seven aspects, including

Implement the established tax and fee reduction policies

The Circular proposes implementing tax reduction and exemption policies of value-added taxes on small-scale taxpayers, and extending the applicable period of value-added tax policies for public transportation, catering, accommodation, tourism, entertainment, culture, sports and other services to the end of 2020. SMEs and individual businesses are allowed to defer the payment for their income taxes to 2021. Taxes on all export products that have not been refunded at the nominal tax rate, other than the products that consume too much energy, cause too much pollution or use too many resources, will be fully rebated.

Strengthen financial support for the real economy

The Circular requires improving financing tools for finance to serve the real economy by deepening the market-oriented interest rate reform to push down loan interest rate. Banks are encouraged to substantially increase credit loans, first-time loans, and loan renewals without repayment of principal for micro and small businesses, vigorously promote the "credit-easy loan" model and the "Bank-Tax Interaction" program, and launch credit products suited to the characteristics of SMEs.

Continuously reduce the institutional transaction cost

The Circular also clarifies to soften the market access and operating restrictions. The government will soften the restrictions on the registration and operation places of SMEs and individual businesses, and facilitate all kinds of entrepreneurs to register and operate and enjoy the support policies in a timely manner. The government will open up the OEM production of new energy vehicles in an orderly manner, promote self inspection and self certification, and implement pilot brand authorization. It is encouraged, where the conditions permit, the electronic license will be issued to food production and marketing enterprises that meet the requirements. No place shall interfere with the application and enjoyment of the aggregate tax payment policy of the head and branch offices of chain enterprises in accordance with the law.

Efforts should be made to reduce the burden of enterprise employment and rent

SMEs will be exempted from paying for social insurance as the pension, for the unemployment and work-related injuries until the end of the year.

The rent of state-owned real estate will be reduced or exempted, and all kinds of owners will be encouraged to reduce or postpone the rent.

Continue to reduce the cost of energy and land use

Strengthen the management of construction land for industrial projects, realize the land use for the project, reasonably increase the land for industrial projects and logistics, and promote the reasonable conversion of different types of industrial land.

Promote logistics cost reduction and increase the efficiency

Encourage the application of 5G, Internet of things, big data and other new technologies in the field of logistics industry, and promote the integrated development of logistics industry and manufacturing, finance, tourism, business and other industries.

Guide enterprises’ innovation management, dig out potential power and increase efficiency

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Mr. Mike Chang

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