Tax Relief Drives Growth in China's Small Businesses
China's small and micro-sized enterprises (SMEs) are the backbone of its economy, playing a critical role in creating jobs, stabilizing the market, and improving livelihoods. In recent years, the Chinese government has implemented a range of tax and fee reduction policies to alleviate the financial burdens on these businesses. The results have been remarkable, with over 5 trillion yuan (696 billion USD) in tax relief granted to SMEs over the past five years.
In the first nine months of 2024 alone, SMEs benefited from 946.1 billion yuan (131.4 billion USD) in tax cuts, a 6.7% increase year-on-year, according to the State Taxation Administration (STA). These initiatives not only reduced costs but also boosted the confidence and resilience of small businesses, supporting their ability to adapt to economic challenges.
China's policies have delivered significant tax savings across key industries, particularly labor-intensive and service-oriented sectors. From January to September 2024, SMEs' tax burden dropped to 1.65% of their revenue, reflecting a 9.6% year-on-year decline.
·Labor-Intensive Industries: Tax burdens in construction and manufacturing sectors decreased by 19.8% and 16.3% respectively compared to 2019, enhancing competitiveness and operational capacity.
·Service Sectors: Industries such as transportation, accommodation, education, and healthcare enjoyed a 40% reduction in tax burdens over the same period, providing critical support for employment and essential services.
This targeted approach demonstrates how fiscal measures can effectively address the unique challenges faced by different industries, ensuring tailored solutions that maximize impact.
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