CNR：

The report pointed out that we will issue VAT and VAT credit refunds on a bigger scale this year. Could you please brief us on the background and details of the policy adoption? Why now instead of sometime earlier? Moreover, why do the VAT credit refunds not cover all the industries? What is the significance of the policy for the improvement of the VAT system in the future? Thank you. 

Xiang Dong:

Thank you. These is a good question. I'd like to invite Mr. Song to answer it. 

Song Li:

VAT credit refunding is an important tax-and-fee support policy adopted this year. Under the current VAT system, an enterprise will have VAT credits if its output VAT is less than the input VAT during a tax period. We have deepened reform since April 2019, establishing and improving the end-of-tax-period VAT credit refund system so as to refund part of the VAT credits.

Currently, China's VAT credit refunds mainly focus on the newly added part generated after April 2019. Among them, we will refund all the newly added VAT credits to advanced manufacturing enterprises, while for other industries, we will refund 60% of the newly added VAT credits that meet the standards.

The report pointed out that we will issue VAT credit refunds on a large scale this year, including the newly added and outstanding ones so as to significantly increase the amount of tax refunds. Given the downward economic pressure, the policy will help enterprises resume their development. Major policies lie in the following two aspects:  

First, we will give priority to micro and small enterprises, refunding outstanding VAT credits to them in one lump sum by the end of June, while also fully refunding newly added credits. In order to ensure that the policy takes full effect, the central government will provide greater fiscal support for local governments to ease their burden. We will ensure that the tax credits are fully refunded in time. 

Second, with a focus on supporting manufacturing, we will work to fully resolve problems in refunding VAT credits in manufacturing, research and technical services, environmental protection, electricity and gas, and transportation industries. 

After the launch of VAT credit refunds on a large scale this year, we will continue to refund the outstanding VAT credits and refund the newly added credits in time, which is of great significance to improving the VAT system.

Thank you.