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New policy released in Zhejiang, expecting to reduce enterprise burden by 200 billion yuan in 2019

Recently, the General Office of the People's Government of Zhejiang Province issued the "Policies of Zhejiang Province for Reducing the Enterprise Burdens and Costs (the first batch of 2019)", which provides 20 measures in five aspects to reduce the operational burden of enterprises.

According to the provincial burden reduction office at the press conference on the policy of reducing enterprise burdens and costs in Zhejiang Province, together with the previous four batches of policies which are still valid, the measures are expected to reduce the burden of enterprises in the whole province by more than 200 billion yuan in 2019, which can ensure the completion of the task of "reducing the annual burden by more than 150 billion yuan" proposed in the provincial government work report.

Specifically, the 6 measures to implement the national tax and fee reduction policies are expected to reduce the burden of enterprises by 84.75 billion yuan for the whole year, the 6 measures to implement the provincial policies are expected to reduce the of enterprise burden by 36.55 billion yuan, and the 4 measures for the energy and land costs of enterprises are expected to reduce the burden by 9 billion yuan. Together with 3 measures for corporate financing and 1 measure to reduce the cost of institutional transactions, the 20 measures are expected to reduce the enterprise burdens in the whole province by 130.3 billion yuan, among which 89.75 billion yuan is reduced to implement the national policies and 40.55 billion yuan is reduced due to provincial policies.

The policies are of the fifth batch to reduce enterprise burdens and costs in Zhejiang Province since 2016. The reporter learned from the press conference that compared with the previous four batches, the policies this year have the following features and highlights:

Focusing on tax and cost reduction. This year, China has made great efforts in tax reduction, which is unprecedented compared with previous years. The first is to deepen comprehensively the reform of value-added tax. The VAT rate for the manufacturing industry and other industries is lowered by 3 points, for the transportation industry and construction industry, 1 point, in addition to a series of supporting measures to ensure the tax burden reduction for all industries. The second is to implement the tax relief policy for all small and micro enterprises, to further relax the grip on small-scale and low-profit enterprises, increase the tax exemption for small-scale taxpayers, expand the preferential taxation of small and micro enterprises, and introduce excessive and progressive taxation methods on small and micro enterprises. The third is to increase tax support for entrepreneurial innovation, to exempt part of the taxation for the entrepreneurial platforms, and to offer preferential treatment for retired soldiers and key groups in entrepreneurship and employment.

Focusing on social security fee reduction. Social security contributions are one of the most concerned issues of burden reduction in recent years. From May 1st, the provinces where urban employees' basic pension insurance paid by the employer exceeds 16% can be reduced to 16%, and for Zhejiang Province the number is 14%, already lower than the national average. In order to further enhance the enterprise’s sense of acquisition, Zhejiang Province has exerted a set of policy combination punches: First, it implements phased reduction of social insurance contributions for enterprises in the manufacturing, transportation, construction and other industries, which is equivalent to 2 monthly social insurance premium paid by the employer. The second is to increase the support for enterprises to maintain stable employment, and make a one-time return to the difficult enterprises from the unemployment insurance funds. The third is to stabilize the payment method of social security, and clarify that no local governments may adopt any measures to increase the actual burden of small and micro enterprises. The fourth is to continue the phased reduction of unemployment insurance and work injury insurance rate policy, extending the policy implementation time to April 30, 2020.

Focusing on small enterprises. In formulating the policy of reducing burdens, Zhejiang Province has fully tilted toward private enterprises. The first is the reduction of taxes and fees. The six local taxes and two additional taxes for small-scale VAT taxpayers are directly reduced by 50% of the taxable amount. The second is the reduction of electricity prices. The average industrial and commercial electricity price has dropped by 10% on the basis of a 10% reduction last year. Third, in terms of financing, the loan interest rate and refinancing spread of private enterprises and small and micro enterprises using central bank refinancing funds are reduced by 1 percentage point compared with the previous year. Banks must determine the interest rate of small and micro enterprises in accordance with the principle of guaranteeing the profit, and large state-owned commercial banks must try to control below 5%. Fourth, in terms of clearing debts, a special campaign has been launched to clean up the accounts of small and medium-sized enterprises in the private sector by government departments and large state-owned enterprises. At present, Zhejiang Province has organized three rounds of comprehensive investigation and liquidation, and repaid more than 2 billion yuan in arrears.


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