Read in Chinese

Speakers:

Mr. Rao Lixin, deputy commissioner of the State Taxation Administration (STA)

Mr. Huang Yun, spokesperson of the STA and director general of the General Office of the STA

Mr. Dai Shiyou, director general of the Tax Policy and Legislation Department of the STA

Mr. Shen Xinguo, director general of the Taxpayer Service Department of the STA

Chairperson:

Ms. Shou Xiaoli, director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

Sept. 20, 2024 

---

Shou Xiaoli:

Ladies and gentlemen, good afternoon. Welcome to this press conference held by the State Council Information Office (SCIO) as part of the series "Promoting High-Quality Development." Today, we have invited Mr. Rao Lixin, deputy commissioner of the State Taxation Administration (STA), to brief you on relevant developments and to take your questions. Also present today are Mr. Huang Yun, spokesperson of the STA and director general of the General Office of the STA; Mr. Dai Shiyou, director general of the Tax Policy and Legislation Department of the STA; and Mr. Shen Xinguo, director general of the Taxpayer Service Department of the STA. 

Now, I'll give the floor to Mr. Rao for his briefing. 

Rao Lixin:

Thank you, Ms. Shou. Ladies and gentlemen, friends from the media, good afternoon. First of all, I would like to sincerely extend my gratitude to the taxpayers, fee payers and all sectors of society for their long-term concern, understanding and support for taxation work. Today, my colleagues and I will discuss with you all the subject of promoting high-quality development through taxation.

Since the beginning of this year, under the strong leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core, the national tax system has resolutely implemented the decisions and arrangements of the CPC Central Committee and the State Council. It has conscientiously fulfilled the responsibilities of tax departments, comprehensively deepened the rule of law in taxation, promoted digital and intelligent upgrades in tax management as well as enforced strict tax regulation. Efforts have been made to create efficient tax services, solidly advance the practice of modern taxation with Chinese characteristics and actively serve high-quality development. This is mainly reflected in four areas:

We are committed to helping enterprises develop by effectively implementing preferential tax and fee policies. Since the beginning of this year, the tax authorities have adhered to collecting tax and fee revenues according to laws and regulations, continuously deepening the "policy to person" approach. Relying on big tax data, they intelligently match preferential policies with applicable individuals and entities as well as carry out targeted policy pushes at specific times to 360 million entities and individuals, sending out 540 million pieces of various preferential tax and fee policy information and ensuring that structural tax and fee reduction policies are solidly implemented. Especially following last year's Central Economic Work Conference, this year's annual sessions of China's National People's Congress (NPC) and the National Committee of the Chinese People's Political Consultative Conference (CPPCC), which emphasized focusing on supporting scientific and technological innovation as well as the development of the manufacturing industry, efforts have been intensified to implement relevant tax and fee support policies. From January to August of this year, the main policies supporting scientific and technological innovation and the development of the manufacturing industry have resulted in tax and fee reductions as well as tax refunds exceeding 1.8 trillion yuan, adding momentum for accelerating the development of new quality productive forces.

We adhere to the principle of putting the people first and continuously strive to enhance the level of tax and fee services. Focusing on "efficiently accomplishing one task," we have continuously implemented the "Spring Breeze Action to Facilitate Citizens' Handling of Tax Affairs." In 2024, we integrated and launched a series of service measures benefiting the public and enterprises. The new electronic tax bureau, with unified standards, has been launched nationwide, reducing the time for tax handling by 20% compared to the past and making tax and fee payments more convenient. We are steadily promoting the comprehensive digitalization of electronic invoices to further enhance taxpayer convenience with using invoices. Additionally, we are vigorously promoting innovative measures such as "reverse invoicing" from recycling enterprises to sellers of scrapped products, actively aiding in large-scale equipment upgrades and the renewal of consumer goods.

We uphold fairness and justice, vigorously maintaining economic and tax order. We continuously establish and improve a dynamic "credit + risk"-based regulatory mechanism, always adhering to law enforcement that is strict, well-regulated, fair and civilized. We avoid disturbing law-abiding businesses while cracking down on tax-related crimes based on laws to effectively maintain economic order and national tax security. Simultaneously, the STA conducts in-depth research and has launched a series of measures to assist in attracting investment to pursue high-quality development, resolutely upholding the integrity of the unified national market.

We practice opening up and sharing, deepening international tax exchange and cooperation. We have expanded China's tax treaty network to 114 countries and regions, strengthened the building of the "TaxExpress" cross-border service brand, and promoted information, policy and service connectivity for cross-border investments. Simultaneously, we are deeply integrated into international tax governance, serving high-level opening up and high-quality joint development of the Belt and Road Initiative. On this occasion, I would also like to announce that the fifth Belt and Road Initiative Tax Administration Cooperation Forum (BRITACOF) will be held in Hong Kong from Sept. 24 to 26. Thank you for your attention.

This year marks the 75th anniversary of the founding of the People's Republic of China and is a crucial year for achieving the goals and tasks of the 14th Five-Year Plan. The third plenary session of the 20th CPC Central Committee made important arrangements to further deepen reform comprehensively and to advance Chinese modernization. Next, we will intently study and implement the guiding principles of the session, focusing on the implementation of various tax-related reform tasks with relentless perseverance. We strive to make new progress in tax affairs, enhance our capacities and levels to serve high-quality development better, and make greater contributions to building a great country and advancing national rejuvenation on all fronts through Chinese modernization. Thank you. 

_ueditor_page_break_tag_

Shou Xiaoli:

Thank you, Mr. Rao, for your introduction. We'll now move on to the Q&A session. Please raise your hand if you have a question.

CCTV:

We know that the third plenary session of the CPC Central Committee has outlined plans for deepening fiscal and tax system reforms, garnering widespread attention. Could you please explain how the tax department will implement the principles of the third plenary session of the CPC Central Committee and further advance reforms in the tax sector? Thank you.

Rao Lixin:

Thank you for your question. The resolution adopted at the third plenary session of the CPC Central Committee lays out strategic, systematic and forward-looking arrangements for further deepening reform comprehensively and advancing Chinese modernization. It positions tax reform as a crucial component of improving the macroeconomic governance system. The resolution incorporates tax reform into major national strategies, including building a high-level socialist market economic system, promoting high-quality economic development, cultivating new quality productive forces, and supporting comprehensive innovation. This underscores the important responsibilities and mission of reforms in the tax sector.

The resolution of the third plenary session of the CPC Central Committee outlines nearly 30 reform tasks directly related to the tax department. It sets overall requirements for improving the tax system and optimizing tax structure to be "conducive to high-quality development, social fairness, and market unification." It also makes specific requirements for the reform of multiple tax types, including value-added tax, consumption tax, and individual income tax. The resolution calls for the full implementation of the principle of legality of taxation and proposes several social insurance premium reform tasks related to the tax department. It covers both tax system reforms and reform of the tax collection and administration system. While making specific arrangements for deepening tax reforms, it also outlines the tax department's role in reforms related to science and technology, the rule of law, people's livelihoods, and ecology. These tax-related reform arrangements are ambitious, comprehensive, responsibility-laden, and practical, providing a clear roadmap for deepening tax reforms over the next five years and beyond.

The national tax system continues to study and thoroughly implement the principles of the third plenary session of the CPC Central Committee. We are aligning our work with the resolution's requirements, considering the realities of tax work, and carefully formulating implementation plans for tax-field reforms. We're establishing a working mechanism where the principal leader of the Party and government takes overall responsibility for implementing reforms, refining the division of responsibilities, and clarifying the roadmap and timetable for each reform item. Moving forward, we will continue to strengthen communication and cooperation with departments such as finance and the development and reform commissions at all levels. We'll listen closely to suggestions from all parties on deepening tax reforms and integrate the implementation of the resolution's tax-related reform plans with ongoing tax work. Through these reforms, we aim to increase efficiency and strengthen capabilities, promoting high-quality tax practices for Chinese modernization in a sound and sustainable manner. This will help achieve the reform goals set by the third plenary session of the CPC Central Committee at a high level. Thank you.

_ueditor_page_break_tag_

Economic Daily:

Tax data is an important economic indicator that can directly reflect the state of economic operations. From the perspective of tax data for the first eight months, what are the highlights of China's high-quality development?

Rao Lixin:

Mr. Huang will answer the question.

Huang Yun:

Thank you for your question. High-quality development is our primary task in building a modern socialist country in all respects. Since the beginning of this year, all regions and departments have continued to apply the new development philosophy in full, in the right way, and in all fields of endeavor and move faster to create a new pattern of development, and focus on promoting high-quality development, achieving new results. From the perspective of tax data, this is mainly reflected in six aspects.

First, innovative industries continue to expand. Value-added tax invoice data shows that from January to August this year, the sales revenues of China's high-tech industries and intellectual property (patent)-intensive industries increased by 11.6% and 8% year on year, respectively.

Second, the proportion of high-end manufacturing has increased. Value-added tax invoice data shows that from January to August this year, the sales revenues of China's equipment manufacturing industry grew by 5.5% year on year, which was 0.9 percentage point higher than the average growth rate of the manufacturing industry. Meanwhile, the proportion of equipment manufacturing sales revenue in the total sales revenue of the entire manufacturing industry reached 44.3%, up 0.4 percentage point compared to the same period last year.

Third, the integration of digital and real economies is deepening. Value-added tax invoice data shows that from January to August this year, the sales revenues of China's core digital economy industries grew by 8.2% year on year. The amount spent by enterprises on digital technologies increased by 8.6% year on year, reflecting improvements in both digital industrialization and industrial digitization.

Fourth, market circulation is becoming more fluid. Value-added tax invoice data indicates that from January to August this year, inter-provincial trade among enterprises nationwide increased by 3% year on year, accounting for 40.7% of total sales volume. This is 0.5 percentage point higher than the same period last year. Additionally, the sales revenue of the transportation and logistics industry increased by 9.9% year on year. These figures reflect steady progress in the development of a unified national market.

Fifth, green and low-carbon development has accelerated. Value-added tax invoice data shows that during the January-August period, sales revenue for green technology services in new energy, energy conservation, and environmental protection grew 24%, 19.9% and 5.8% year on year, respectively; sales revenue for clean energy power generation increased 12.4% year on year; and sales revenue for new energy vehicle manufacturing rose 33.6% year on year.

Sixth, the level of openness continues to improve. Tax data shows that during the first eight months, enterprises received 10.1% more direct export rebates compared to the same period last year, demonstrating the resilience and rapid growth of China's exports. Meanwhile, tax refunds to overseas shoppers leaving China increased by 150% year on year, indicating a rising interest in visiting China among foreign tourists. Thank you.

_ueditor_page_break_tag_

Changjiang Daily:

Individual income tax affects millions of households. The government has increased the standards for special additional deductions, including those for children's education and elderly care. What's the current progress on this? Thank you.

Shen Xinguo:

Thank you for your question. I believe most attendees here today can feel the tangible benefits this policy brings. To further reduce family expenses on childbirth, childcare, and elderly care, the State Council decided that from Jan. 1, 2023, the standards for special additional deductions would be increased for the care of children under 3 years old, children's education, and elderly care. Specifically, the deduction amounts for the care of children under 3 and for children's education have both increased from 1,000 yuan to 2,000 yuan per month per child. The deduction amount for elderly care has increased from 2,000 yuan to 3,000 yuan per month.

After the policy's release, tax authorities swiftly implemented it. We promptly adjusted and upgraded information systems to facilitate taxpayers' applications for deductions under the new policy. We also compiled explanatory materials and enhanced targeted publicity to ensure taxpayers could benefit as soon as possible. These efforts have yielded good results. Data from the individual income tax final settlement, which concluded at the end of June, shows that about 67 million people benefited from this policy in 2023. The total tax cuts surpassed 70 billion yuan, with an average reduction of over 1,000 yuan per person. Specifically, tax cuts for children's education, elderly care, and care for children under 3 years old were about 36 billion yuan, 29 billion yuan, and 5 billion yuan, respectively. The policy's coverage, total tax reduction, and intensity of tax cuts were substantial, providing timely benefits to taxpayers caring for both elderly parents and young children.

Looking ahead, we will continue to focus on issues affecting people's living standards. We will implement practical measures to fully release the benefits of tax policies, and strive to make greater efforts and contributions to improving people's livelihoods and well-being. Thank you.

_ueditor_page_break_tag_

National Business Daily:

The third plenary session of the 20th CPC Central Committee further emphasized the importance of building a unified national market. What measures has the tax department taken to support this goal? Thank you.

Rao Lixin:

Thank you for the question. The third plenary session proposed building a unified national market, facilitating the smooth flow of production factors, efficient allocation of all types of resources, and full realization of market potential. In recent years, tax authorities have deeply implemented the decisions and arrangements of the CPC Central Committee and the State Council on accelerating the building of a unified national market. We have performed our duties and played our roles. Our focus has been on creating a conducive environment supported by favorable tax policies, effective enforcement, and enhanced services regarding taxes and fees.

We have enhanced fair competition review on new policies and documents, and made efforts to eliminate policies and measures that impede a unified market and fair competition, as well as tax-related laws, regulations and policies that treat enterprises unequally. We have improved the multi-channel mechanism and set up direct contact points for reporting problems so that we can quickly respond to issues reported by people working at the primary level as well as tax and fee payers and improve the fairness and certainty of policies. Since 2023, we have published 168 related policy Q&As and jointly or independently updated, compiled, and published 13 guides on favorable tax policies to facilitate sci-tech innovation, manufacturing development, and coordinated development.

We have revised and refined the code of conduct for tax collection and administration, further boosting national-level standardization in this field. Meanwhile, we have offered guidance for tax authorities in various regions to launch unified discretion standards for tax administrative penalties. These regions include the Yangtze River Delta region and the northeastern, northern, northwestern, southwestern, and central southern parts of the country. As a result, the unity and standardization of tax enforcement have been strengthened.

We have further facilitated cross-regional relocation for enterprises by launching a series of measures to optimize advance notifications, expedite ongoing processes, and improve post-relocation services. At present, eligible taxpayers can complete cross-regional relocation procedures as quickly as within one day. At the same time, we have continued to expand cross-regional tax and fee services. In March, we launched a pilot program for "remote virtual windows" in local tax service centers, which has since processed 164,000 cross-regional tax and fee transactions for taxpayers and payers.

In accordance with the arrangements of the CPC Central Committee and the State Council, we have actively collaborated with relevant departments to firmly oppose any investment attraction practices that violate regulations and undermine national market unity and fairness. The STA and provincial-level tax bureaus have set up leading groups to regulate tax-related issues stemming from irregular investment attraction practices. We have implemented a regular monitoring index system to promptly identify, warn about, and investigate suspicious activities. Working with relevant departments, we have also publicized typical cases of tax-related irregularities in investment attraction to promote regulation through case studies.

Looking ahead, the tax authorities will act upon the arrangements made by the third plenary session of the 20th CPC Central Committee. We will further elevate our political awareness, redouble our efforts, and enhance tax collection and administration services. We remain committed to contributing to the development of a unified national market through our tax-related initiatives. Thank you!

_ueditor_page_break_tag_

21st Century Business Herald:

The manufacturing industry forms the foundation of the real economy. Could you use tax revenue data to illustrate the current state of manufacturing development? Additionally, what role have structural tax and fee reduction policies played in supporting the development of the manufacturing sector? Thank you.

Dai Shiyou:

Thank you for your questions. The manufacturing industry is the foundation of a nation and the base of its strength. According to value-added tax (VAT) invoice data, from January to August this year, China's manufacturing industry sales revenue grew by 4.6% year on year, showing steady improvement. Three main characteristics are evident:

First, the manufacturing industry's role as an economic stabilizer continues to strengthen. VAT invoice data shows that from January to August, the sales revenue of China's manufacturing industry accounted for 29.7% of total sales revenue, up 0.8 percentage point over the same period last year.

Second, the manufacturing industry is gradually moving up the value chain towards medium and high-end production. VAT invoice data shows that from January to August, the sales revenue of China's high-end equipment manufacturing and high-tech manufacturing sectors represented 16.5% and 15.6% of total manufacturing sales revenue, respectively. These figures represent an increase of 0.5 percentage point and 0.6 percentage point over the same period last year, respectively.

Third, the pace of intelligent and green development has accelerated. VAT invoice data reveals that from January to August, China's manufacturing industry increased its digital technology purchases by 10.7% year on year. This boost drove sales revenue in the intelligent equipment manufacturing sector up by 11.5% compared to the same period last year. Additionally, industrial enterprises above designated size increased their procurement of energy conservation and environmental protection services by 19.1% year on year, reflecting intensified efforts by businesses to save energy and control pollution.

For a long time, tax departments have conscientiously implemented the decisions and arrangements of the CPC Central Committee and the State Council, accurately and efficiently implementing preferential tax and fee policies to support the development of the manufacturing industry. This has helped the manufacturing sector relieve operational pressures, encourage innovation, and stimulate development potential. We have eased tax and fee burdens on the manufacturing industry. From 2018 to 2023, newly implemented tax and fee cuts and deferrals for China's manufacturing industry totaled over 4 trillion yuan, representing over 30% of total tax and fee incentives — the highest among all industries. Additionally, we have contributed to the upgrading and transformation of the manufacturing industry. A series of tax-and-fee policies promoting scientific and technological innovation, energy conservation and environmental protection have effectively advanced the transformation and upgrading of manufacturing enterprises towards high-end, intelligent, and green development. Taking the additional deductions for R&D expenses as an example, in 2023, 333,000 manufacturing enterprises enjoyed an additional deduction of 2.03 trillion yuan for R&D expenses, with both the number of enterprises benefiting from these policies and the amount of additional deductions accounting for over 50% of the total, reaching 52.9% and 58.8% respectively.

Moving forward, we will conscientiously implement the guiding principles from the third plenary session of the 20th CPC Central Committee. We will prioritize support for the development of the manufacturing industry, advance the effective implementation of policies, and bring more tangible benefits to enterprises. These efforts aim to better contribute to the high-quality development of the manufacturing sector.

_ueditor_page_break_tag_

Cover News:

What key initiatives have the tax authorities undertaken to promote efficient one-stop government services? This year marks the 11th consecutive year of the "Spring Breeze Action to Facilitate Citizens' Handling of Tax Affairs" campaign. Could you please update us on its progress? Thank you.

Rao Lixin:

We will have Mr. Shen answer this question.

Shen Xinguo:

Thank you for your questions. The State Council has formulated a list of major tasks for one-stop government services. Seven out of 21 major tasks are tax-related matters. These items are not only a wish list for enterprises and citizens but also a responsibility checklist for tax departments. Since the beginning of this year, we have thoroughly implemented the Guidelines on Further Optimizing Government Services to Improve Government Performance and Promoting One-Stop Government Services, leveraging our functions to enhance the overall efficiency of online and offline government services.

First, we have simplified procedures. For example, we've implemented declaration methods such as "data collection + intelligent pre-filling" and "coordinated tax management + information supplementation," enabling most taxpayers to complete their declarations with just one-click confirmation or minimal information correction. Second, we have promoted business integration. For instance, in the new E-tax China platform, we've created multiple comprehensive tax payment scenarios, integrating matters involving multiple taxes and fees that previously required multiple steps into one-stop services, effectively meeting taxpayers' needs and expectations. Third, we have expanded data sharing. For example, we've deepened cooperation with the General Administration of Customs and other departments to share data and information promptly, improving service efficiency for matters such as export tax rebates for enterprises. Fourth, we have strengthened interdepartmental cooperation. We've actively cooperated with market regulation departments, promoting "one-stop processing" for enterprise information changes and "one-stop online processing" for enterprise deregistration. This helps efficiently complete "one-stop" legal compliance information verification for enterprise listings and enterprise bankruptcy information verification.

While implementing key tasks for one-stop government services, tax departments have conducted the Spring Breeze Action to facilitate tax services for 11 consecutive years. Our efforts have been focused on improving efficiency to serve the public. Being committed to providing one-stop services for taxpayers and fee payers, we have offered innovative services and expanded our service scope to enhance convenience and efficiency.

To improve communication and guidance, we have optimized targeted notifications of preferential tax and fee policies, increasing precision and coverage in reaching targeted groups. We've launched "first lesson" campaigns for new taxpayers, allowing them to access relevant courses while handling services online. Additionally, tax authorities across regions have conducted over 1,500 online video Q&A sessions, effectively disseminating tax and fee policies and addressing common concerns through various methods.

To enhance tax and fee payment convenience, we've expanded payment channels, streamlined required documentation, and further reduced burdens on taxpayers and fee payers. We've deepened cross-regional processing, enabling taxpayers and fee payers to handle nationwide tax and fee matters at any comprehensive tax service hall.

In expanding taxpayer credit services, we've improved credit evaluation methods, helping new taxpayers enhance their credit. By August's end, 26,000 newly established taxpayers achieved credit upgrades. In collaboration with financial supervision departments and commercial banks, we have standardized and improved alignment between banks and tax departments. In the first half year, micro and small enterprises across China obtained 1.56-trillion-yuan bank loans through the "Bank and Tax Interaction" mechanism, representing a 7.6% year-on-year increase. These efforts have helped micro and small enterprises gain better access to credit support. 

Going forward, we will establish regular face-to-face communication mechanisms between tax authorities and businesses to advance comprehensive collection and efficient resolution of tax and fee-related requests, continuously improving the effectiveness of our tax and fee services. Thank you.

_ueditor_page_break_tag_

Phoenix TV:

We noted that last year, to mark the 10th anniversary of the Belt and Road Initiative (BRI), the STA introduced the cross-border service brand TaxExpress. Could you share the current implementation results? Additionally, what progress has been made on building the Belt and Road Initiative Tax Administration Cooperation Mechanism (BRITACOM )? Thank you.

Rao Lixin:

Thank you for your questions. I'll address them. Since the launch of the TaxExpress cross-border service brand last year, tax departments have actively supported the entire process and lifecycle of cross-border investment. We've focused on developing a cross-border tax and fee service system, providing robust support for companies engaging in cross-border investment.

We have created a cross-border investment tax service ecosystem. The SAT has fully leveraged interdepartmental collaboration, enhancing data sharing and coordination with the National Development and Reform Commission, the Ministry of Commerce, and China Customs. Concurrently, we've guided local tax authorities to strengthen departmental synergy, integrating tax service resources to support companies' cross-border investments. 

We have enriched our cross-border investment tax service system. To date, we've updated and released 105 country- and region-specific investment and taxation guides, including guidelines for 99 overseas taxation items, 26 overseas tax cases, and 50 FAQs for cross-border taxpayers. This year, we also introduced new resources such as the Export Tax Refund (Exemption) Operation Guidelines for Overseas Warehouses of Cross-Border E-Commerce Businesses, the "Going Global" Individual Tax Guidelines, and global tax information updates. These provide references for cross-border investors to stay informed about overseas tax policy dynamics and mitigate cross-border investment tax risks.

We have expanded rapid communication channels for cross-border investment tax issues. We've established regular communication mechanisms with foreign chambers and associations, addressing 155 cross-border tax challenges this year. We've invited foreign tax authorities, overseas Chinese enterprise associations, and Chinese embassies to explain cross-border investment policies to companies both online and offline. So far, we've held five country-specific events in this regard, including Austria, the Republic of Korea and Mexico. We've continuously provided cross-border tax advisory services through the national 12366 hotline. This year, we've provided 110,000 bilingual (Chinese and English) tax consultations for both outbound Chinese enterprises and inbound foreign companies.

This year marks the sixth year of the establishment of the BRITACOM. Since its inception in 2019, BRITACOM forums have been successfully hosted four times in China, Kazakhstan, Algeria, and Georgia, yielding 20 key outcomes and fostering an international tax environment conducive to growth. Five Belt and Road Schools of Taxation have been established in Yangzhou, Beijing, Macao, Astana and Riyadh. Recently, another School of Taxation was added in Macao (Hengqin Campus), creating a multilingual, multinational tax training network covering English, Portuguese, Russian and Arabic-speaking regions. Focusing on themes such as "tax administration and digitization," many workshops and seminars for tax personnel from BRI partner countries have been held, attracting over 1,500 participants. The official website of BRITACOM has attracted visitors from 175 countries and regions, facilitating exchanges and mutual learning among all parties.

As I mentioned at the outset, the fifth Belt and Road Initiative Tax Administration Cooperation Forum will be held in Hong Kong from Sept. 24 to 26. About 400 representatives from over 60 countries, regions and international organizations will gather to discuss the theme of "Deepening Tax Administration Cooperation for High-Quality Belt and Road Development." They will explore ways to deepen tax cooperation within the BRI. Once again, I invite all media representatives to actively follow and report on this event. Thank you.

_ueditor_page_break_tag_

Beijing Youth Daily:

The large-scale equipment upgrades and consumer goods trade-in programs implemented this year are important measures driving high-quality development. These measures are conducive to both investment and consumption. I'd like to ask, according to tax data, how have these two measures progressed? Thank you.

Rao Lixin:

I would like to invite Mr. Dai to answer this question.

Dai Shiyou:

Thank you for your question. The large-scale equipment upgrades and consumer goods trade-ins were initiated by the CPC Central Committee and the State Council as a major move to drive China's overall high-quality development. In March, the State Council issued an action plan for promoting large-scale equipment renewal and consumer goods trade-ins, and relevant departments and local governments subsequently rolled out supporting measures to ensure their effective execution.

Driven by these policies, enterprises significantly accelerated their equipment renewal. VAT invoice data show that from April to August this year, the value of machinery equipment purchased by enterprises nationwide increased by 5.6% year on year, with a growth rate 7.6 percentage points higher than in March, before the introduction of the action plan. The effect is especially noticeable in three key areas. Industrial enterprises have accelerated equipment renewal, with purchase increasing by 4.4% year on year from April to August, 5.5 percentage points higher than in March. Information and technology industry upgrades also accelerated. From April to August, machinery equipment purchases by the information technology service industry and the scientific research and technology service industry surged by 17.7% and 20% year on year, respectively, up 16 and 10.6 percentage points from March. Transportation and rental business service equipment updates accelerated. From April to August, machinery equipment procurement by the transportation industry and rental business service equipment industry increased by 0.4% and 16.1% year on year, respectively, 15 and 19.2 percentage points higher than in March.

Driven by factors such as national incentives, local support, and enterprise concessions, VAT invoice data shows that consumer demand for automobiles, home appliances, and furnishings has gradually increased. New energy vehicle (NEV) sales increased significantly, and second-hand car sales accelerated. From April to August, NEV sales jumped by 38.4% year on year, 10.9 percentage points higher than in March. Meanwhile, second-hand vehicle sales rose by 6.2% year on year, 10.8 percentage points higher than in March. Home appliance sales improved. From April to August, sales of household appliances like refrigerators and household audio-visual equipment such as televisions increased by 2.4% and 5% year on year, respectively, 2.8 and 11.6 percentage points higher than in March. Furniture and sanitary ware products were selling well. From April to August, retail sales revenue of furniture and sanitary ware grew by 8.9% and 12% year on year, respectively, 8.3 and 22.6 percentage points higher than in March.

Next, the tax department will continue to implement various tax and fee support policies in accordance with the deployment and requirements of the CPC Central Committee and the State Council. This will better facilitate and enhance the efficiency of large-scale equipment upgrades and consumer goods' trade-ins. Thank you.

_ueditor_page_break_tag_

Shou Xiaoli:

The last question, please.

Xinhua:

China has introduced many preferential tax policies to support innovation, among which a policy for additional deduction to R&D expenses has attracted wide attention. Could you brief us on this?

Rao Lixin:

Mr. Huang will answer this question.

Huang Yun:

Thank you for your question. In recent years, China has introduced a series of preferential tax policies to support scientific and technological innovation, such as the additional deduction for R&D expenses and preferential income tax policies for high-tech enterprises. Among them, the R&D expense deduction offers broad coverages, significant impact and high value, effectively enhancing enterprises' role as the main drivers of innovation. To make this easier to understand, let me give a simple example. If a company engages in R&D activities and incurs eligible R&D expenses of one million yuan, and if the 100% additional deduction policy applies, the company can deduct two million yuan in R&D costs before calculating its income tax. Simply put, for every one yuan spent, the company can deduct two yuan in costs. This approach significantly reduces the company's taxable income and, consequently, the tax payable. By reinvesting the tax savings into R&D, companies create a positive cycle that promotes innovation.

In order to further advance innovation-driven development and encourage enterprises to increase their investment in R&D, the policy for additional R&D expense deductions has been continuously strengthened in recent years. This has boosted companies' confidence, enhanced their determination and injected fresh momentum into technological innovation. It is mainly reflected in three aspects:

First, the additional deduction rate has been continuously raised. Starting in 2017, the R&D expense deduction was raised from 50% to 75% in phases across various industries. It was then further increased to 100%, with a 120% deduction now available for R&D expenses in key areas, such as integrated circuits and industrial mother machines.

Second, the timing for benefiting from the policy has been advanced several times. Initially, the additional deduction could only be claimed during the annual corporate income tax settlement. This was extended to the October prepayment declaration and then the July prepayment period. This allows enterprises to access policy benefits earlier, providing greater cash flow to increase their R&D investments.

Third, efforts have been made to continually improve the precision of policy implementation. Tax departments have carefully conducted policy promotion and guidance, providing targeted information. The Implementation Guidelines for the Policy of Additional Deduction of Research and Development Expenses was compiled and published, with timely updates and improvements. They have also issued case studies to address challenging issues in identifying R&D activities and policy application, further clarifying and standardizing implementation standards. These efforts help enterprises benefit from the policy more accurately and promptly.

According to data from the 2023 annual corporate income tax settlement that concluded in the first half of this year, a total of 629,000 enterprises across the country benefited from additional R&D expense deductions amounting to 3.45 trillion yuan. This policy has injected new momentum into accelerating the development of new quality productive forces. On the one hand, it has strongly supported the innovative development of high-tech enterprises. In 2023, 405,000 high-tech enterprises received additional deductions totaling 2.83 trillion yuan, a year-on-year increase of 15.1%. The average deduction per company is 2.5 times that of enterprises that are not classified as high-tech. On the other hand, it has significantly supported the innovation and development of private enterprises. In 2023, private enterprises received additional deductions totaling 2.59 trillion yuan, a year-on-year increase of 12.5%, accounting for 75% of all additional deductions across enterprises.

Next, the tax department will thoroughly implement the spirit of the third plenary session of the 20th CPC Central Committee. We will further enforce tax policies, such as the additional deduction for R&D expense, to support technological innovation. Our goal is to fully support the innovation and development of various enterprises and to better nurture and expand new quality productive forces. Thank you.

Shou Xiaoli:

Thank you, Mr. Rao, and all our speakers. Thanks to all journalists for joining us. That's all for today's briefing. Goodbye, everyone.

Translated and edited by Zhang Rui, Zhou Jing, Yang Chuanli, Ma Yujia, Liu Sitong, Wang Wei, Xu Kailin, Liu Jianing, Zhang Tingting, Li Huiru, Yan Xiaoqing, Liu Qiang, Rochelle Beiersdorfer, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.