China says to exempt 3% VAT levied on some small firms By Reuters

© Reuters. FILE PHOTO: A Chinese flag flutters outside the Chinese foreign ministry in Beijing, China February 24, 2022. REUTERS / Carlos Garcia Rawlins

BEIJING (Reuters) – China will exempt the 3% Value Added Tax (VAT) levied on some small firms, the country’s main source of jobs, the finance ministry said on Thursday, to help shore up the world’s second-largest economy.

The exemption will take effect from April 1 to Dec. 31, the ministry said.

The measure was part of a slew of policies aimed at supporting small firms and easing their financial burdens amid recent COVID-19 outbreaks and a slowing economy.

To shore up economic stability, China has pledged around 1.5 trillion yuan ($ 235.47 billion) of VAT rebates to cushion the financial pressure on small firms.

Xu Hongcai, vice minister of finance, told a press conference on Wednesday that all small firms can claim 100% VAT rebates this year compared to 60% previously.

In addition, a total of 1.2 trillion yuan of special transfer payments by the central government to regional governments have been arranged to support tax rebates and employment, the ministry said.

The first batch of special transfer payments of 400 billion yuan were issued on Monday.

($ 1 = 6.3702 yuan)

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