The Paper:

Mr. Liu noted that China cut 4.2 trillion yuan in taxes and fees last year, hitting a record high. How will the preferential policy of tax and fee reductions continue and be improved this year? Thank you. 

Liu Kun:

I will invite Mr. Zhu to answer this question about tax and fee reductions. 

Zhu Zhongming:

Thanks for your question. In 2022, facing the triple pressures of shrinking demand, disrupted supply and weakening expectations, the CPC Central Committee with Comrade Xi Jinping at its core exercised overall leadership, made sound decisions, improved and innovated macro regulation, promptly and decisively implemented a new package of tax-and-fee policies, which helped cultivate and develop business entities, and promote economic recovery. 

The tax and fee reduction policies implemented last year had the following three features:

The first was intensive efforts. Tax and fee reductions, as well as tax refunds and postponed tax and fee payments introduced last year, totaled more than 4.2 trillion yuan, including approximately 2.46 trillion yuan in value-added tax (VAT) credit refunds, which is 3.8 times more than that of 2021. This was the most substantial effort in recent years. 

The second was early implementation. Efforts were made to refund substantial VAT credits at a bigger scope and faster pace, with most completed in the first half of last year. The outstanding VAT credits for the year were refunded in advance by the second quarter. Various preferential policies were implemented early for quick effect.

The third was more coordination. We strengthened coordination and connection and successively introduced a package of policies, including granting small taxpayers exemptions from VAT payments, temporary postponement of social insurance premium payment, and purchase tax reductions on certain passenger vehicles. These policies were designed to ease difficulties and promote synergies.

Tax cuts and fee reductions get right to the spot in tackling the pains and difficulties currently troubling business entities and apply a "fertilizer" to the roots of their development. The effect of easing the burdens and difficulties is quite obvious. We compiled statistics and found that in 2022, the tax burden of 100,000 key tax source enterprises across the country dropped by 2.7% per 100 yuan revenues. As Mr. Liu Kun just reported, the proportion of China's tax revenue in GDP dropped to 13.8% last year. After excluding the one-time factor of large-scale VAT credit refunds, the tax burden level was about 15%. This has increased cash flow and enhanced development vitality for enterprises, making them more resilient in responding to risks and challenges.

In 2023, various tax-and-fee policies will still play a significant role in helping enterprises ease their difficulties and maintaining major economic indicators within an appropriate range. We will take into account the bearing capacity of finance and the need to ease the difficulties of businesses, study and clarify policies as soon as possible, ensure they are implemented, and promote the formation of a positive circle of "building a deeper pool to farm more fish."

First, we will fully implement all existing policies. We will continue to implement the tax cut and fee reduction policies that have been clearly outlined. We will take solid steps to ensure that tax and fee reductions take full effect. At the same time, we will act firmly against tax evasion and tax fraud, and resolutely deter arbitrary charges.

Second, we will refine and improve our preferential policies. In terms of existing measures such as tax cuts, fee reductions, tax refunds, and tax deferrals, we will focus on continuing and optimizing these measures so that these policies can better benefit business entities.

Third, we will further enhance the precision of our policies. We will focus on support for MSMEs, self-employed individuals, and industries in extreme difficulty and create momentum and vitality for micro-entities' development. Thank you.