What’s new: China provided tax and fee relief worth more than 4.2 trillion yuan ($622 billion) in 2022, the country’s tax authority said, as the government ramped up efforts to help businesses weather an economic slowdown.
Micro and small enterprises, as well as individual businesses, were the biggest beneficiaries of the support, which included value-added tax (VAT) refunds and tax and fee cuts, said Wang Daoshu, a deputy commissioner of the State Taxation Administration.
Manufacturers enjoyed around 35% of the total tax and fee relief, Wang said at a press briefing Tuesday. Other sectors including catering, retail, tourism and transportation — some of the hardest hit by the pandemic — also benefitted.
Among the relief were 2.46 trillion yuan in VAT refunds, nearly four times the amount refunded in 2021, he said.
The background: China implemented an extensive tax and fee relief program last year to help businesses alleviate financial strain, cope with the impact of Covid-19 restrictions and ultimately improve the economy.
Premier Li Keqiang said in March that when compared with large-scale investments and consumption vouchers, tax and fee cuts have been the most efficient at lifting businesses out of financial doldrums.
Yet, the new VAT credit refund system that went into effect in April has strained the finances of a number of local governments, underscoring the cost of shoring up an economy already suffering from other ailments including a debt crisis in the property market.
Related: China’s Tax Revenue Sinks Amid Rollout of New VAT Refund Policy
Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
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