Chinese authorities have issued a circular clarifying relevant policies to increase the scale of value-added tax (VAT) credit refunds, to support the development of small businesses and manufacturing and boost vitality of market entities.
The circular was issued following the executive meeting of the State Council on Monday. According to the meeting, the VAT credit refund this year is worth around 1.5 trillion yuan (235.56 billion U.S. dollars). This is a relief measure that can support businesses directly and efficiently.
VAT rebates will be scaled up for micro and small enterprises including individually-run businesses by extending the policy of refunding VAT in full to those eligible, according to the circular jointly released by the Ministry of Finance and the State Taxation Administration.
The country will also refund the balance of VAT credits to these firms, per the circular.
The preferential tax policy will also cover companies in sectors including scientific research, technology services, software and information technology, as well as ecological protection, transportation and postal services, according to the circular.
