China's low-income people, such as farmers and the urban
jobless, will continue to benefit from tax incentives next
year.
Director Xie Xuren of the State Administration of Taxation said
on Friday preferential tax policies will continue.
This means companies that provide jobs for urban jobless would
get preferential tax policies as would unemployed people who start
their own companies, insiders said.
The government would also push forward tax and fee reforms in
the rural areas to reduce the financial burden for farmers, he said
at an annual tax working conference in Beijing.
"The government will reduce more of the agriculture tax rate
next year," he said. "And exemption of the agriculture tax will be
expanded to more areas."
Five provinces and municipalities including Shanghai, Beijing
and Fujian already dropped the agriculture tax this year.
The agriculture tax rate in 11 major grain production provinces
was also cut by 3 percentage points.
The provinces of Henan, Hainan, Shanxi, Guangdong and Jiangsu
announced earlier this week they will abolish the tax next
year.
Tax benefits will also be extended to companies involved in the
development of western areas, the renovation of the old industrial
bases in Northeast China, and development of the high and new
technologies, Xie said.
The government also plans to reform the current tax system
adopted in 1994, he said.
The tax rebate system, which allows for rebates of the
value-added tax and consumption tax to exporters, will continue to
be improved.
Zhang Peisen, a senior researcher with the administration's
Taxation Research Institute, said the present macro-economic
situation is favorable for tax system reform.
The government needs to take advantage of the favorable
situation to improve the existing tax system, to make it more
scientific and fair, he said.
Xie said the government will better carry out trial reforms on
the value-added system started on July 1 in the provinces of
Liaoning, Jilin and Heilongjiang.
The new system, which allows companies in the provinces' eight
industries including equipment manufacturing to claim tax
deductions when buying new machinery equipment, will expand to more
areas later, he said.
The tax department will also co-operate with other relative
departments to expand the consumption tax to more sectors, he
said.
The tax department will study and make preparations for unifying
the two different income tax policies for domestic and
foreign-funded companies, he said.
The present enterprise income tax rates 33 percent on domestic
companies and 17 percent on foreign-funded companies were
considered unfair for domestic companies.
The government plans to unify the rates.
Finance Minister Jin
Renqing said earlier this month the tax burden for
foreign-funded companies would not change a lot, following the
enterprise income tax reform.
Xie said that next year, efforts will also be made to improve
personal income tax and property tax.
(China Daily December 25, 2004)